Preamble

The House met at Half past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

SHEFFIELD EXTENSION BILL

Standing Order 205 (Notice of Third Reading) suspended; Bill to be read the Third time forthwith.—[The Chairman of Ways and Means.]

Bill accordingly read the Third time, and passed.

Oral Answers to Questions — FESTIVAL OF BRITAIN (POLITICAL PROPAGANDA)

Mr. Boyd-Carpenter: asked the Lord Privy Seal what steps are taken to ensure the exclusion from the publicity material issued by the authorities of the Festival of Britain of material of a nature connected with party political propaganda.

The Lord Privy Seal (Mr. Stokes): Publicity material issued by the Festival Office is produced in conformity with the content of the Festival programme under the supervision of representatives of all political parties. The freedom of the Festival from political bias has been generally recognised.

Mr. Boyd-Carpenter: Arising out of the latter part of that answer, is the right hon. Gentleman aware that the Labour Party have produced from Transport House a publication entitled "Festival" deliberately designed to exploit the Festival for party purposes, and can I have the right hon. Gentleman's assurance that this conduct had neither the assistance nor the connivance of the Festival authorities?

Mr. Stokes: I am very much surprised that the hon. Gentleman should ask me that. I have nothing whatever to do with

what the Labour Party or the Tory Party do. As deputy "Lord Festival," I have nothing whatever to do with it. There is no political propaganda in the Festival publications. If any political party chooses to use the Festival name. I cannot help it.

Oral Answers to Questions — FALKLAND ISLANDS

Chilean and Argentinian Personnel

Mr. Fitzroy Maclean: asked the Secretary of State for the Colonies what information he has as to the respective strengths of the eight groups of Chilean and Argentinian personnel at present in illegal occupation of British territory in the Falkland Island Dependencies.

The Secretary of State for the Colonies (Mr. James Griffiths): As the reply is necessarily rather long, I shall, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.

Mr. Maclean: Can the Minister say approximately how many aliens are at present in occupation of British territory in these Dependencies?

Mr. Griffiths: All the details are in the reply which will appear in the OFFICIAL REPORT. If the hon. Member studies that reply and asks Questions afterwards, I shall be very glad to deal with them.

Commander Noble: Although the answer may be long, is it not likely that the figures, in their respective groups, may be rather small; and as there are adequate provisions for preventing such landings and occupations, could the Minister say why nothing has been done about it before?

Mr. Griffiths: That is another Question. I have been asked for information, and I shall give it in full detail in the OFFICIAL REPORT.

Sir Peter Macdonald: May I ask why these illegal occupations have taken place only since the Socialist Party came into power? Why do they not exercise the power they have to—

Mr. Speaker: The Question asks for information and not for power to be exercised.

Following is the latest available information in each case:

Chilean parties

Greenwich Island (South Shetland Group)—six men.

Cape Legoupil (north-west tip of Grahamland)—six.

Paradise Harbour (west coast of Grahamland)—personnel not yet installed at time of visit; likely estimate ten to twelve.

Argentine parties

Laurie Island (South Orkney group)—eleven.

Deception Island (South Shetland group)—ten.

Paradise Harbour (west coast of Grahamland)—four.

Melchior Islands (Palmer Archipelago, off west coast of Grahamland)—uncertain.

Marguerite Bay (west coast of Grahamland)—the establishment of this party was announced by the Argentine Government late last Antarctic summer; independent confirmation is not yet available.

Legislative Council

Commander Noble: asked the Secretary of State for the Colonies the present composition of the Legislative Council of the Falkland Islands; on what occasions the Governor has a casting vote; and how often he has used this in order to carry official measures.

Mr. J. Griffiths: At present, the Council is composed of the Governor and six official members. The six unofficial members resigned on 24th April. The Governor has no original vote, but has a casting vote if the voting is equal. Since the present Constitution came into force on 1st January, 1949, he has used his casting vote to carry official measures on three occasions.

Commander Noble: Could the Minister say, first of all, why the unofficial members have resigned, and, secondly, in view of the fact that there are no mixed communities in the Falkland Islands, why they should not be given some considerable measure of responsibility in domestic affairs?

Mr. Griffiths: I gather from an informal talk the Governor had with them that they have indicated that the reason for the resignations was that they desire an unofficial majority. This matter is under consideration by the Governor and myself.

Mr. E. L. Mallalieu: Will my right hon. Friend bear in mind, having regard to the remoteness of the Falkland Islands

and the frustration which is likely to follow from that remoteness in the minds of the inhabitants, the necessity for associating the inhabitants progressively with the Government of their territory?

Mr. Griffiths: I think my hon. Friend knows our record in colonial matters in the last few years.

Mr. Lennox-Boyd: Since two of these unofficial members are nominated and four are elected, and since they have all acted together, must there not be something in these mass resignations, and will the right hon. Gentleman look again into the circumstances that caused them?

Mr. Griffiths: I am considering, with the Governor, the cause of the resignations and the proposals which have been made.

Oral Answers to Questions — GOLD COAST (DISEASED COCOA TREES)

Mr. Thomas Reid: asked the Secretary of State for the Colonies to what extent the compulsory cutting out of diseased cocoa trees has been resumed in the Gold Coast.

Mr. J. Griffiths: I would refer my hon. Friend to my reply to the hon. Member for Leyton (Mr. Sorensen) on 6th June.

Mr. Reid: While I am aware of that reply, may I point out that my Question referred to what has been done since then? Is not my right hon. Friend aware that the whole economic life of the Gold Coast will be threatened unless these trees are cut out?

Mr. Griffiths: Yes, Sir. I think it is generally recognised by all concerned in the Gold Coast that so far no alternative has been found to cutting out. On the basis of a report submitted to me, it has been decided for the time being to abandon compulsory cutting out and to rely on the co-operation of the farmers. So far, the only remedy has been cutting out.

Oral Answers to Questions — SARAWAK

Lecturer's Visit

Mr. Dodds-Parker: asked the Secretary of State for the Colonies what was the purpose of the visit to Sarawak of Mr. Shearman, of the Workers' Educational Association; and to what extent the cost of his visit was met from public funds.

Mr. J. Griffiths: Mr. Shearman visited Sarawak from Singapore to lecture and give advice on educational problems. He went there at the request, supported by the Sarawak administration, of the British Council's representative, and the cost was met from funds remitted to the Council by the Colonial Office.

British Council

Mr. Dodds-Parker: asked the Secretary of State for the Colonies what staff are maintained by the British Council in Sarawak; and what are their activities.

Mr. J. Griffiths: A director, a part-time librarian, four clerical staff (one part-time) and three domestic staff. Since the first director was appointed early in 1950, he has established centres at Kuching and Sibu, and has begun to organise cultural activities of the usual kind for which the Council is responsible. One scholar, one bursar and two visiting students have been sent to the United Kingdom.

Mr. Dodds-Parker: Cannot the right hon. Gentleman do something to co-ordinate the apparent overlapping of these various agencies in these rather remote territories, where the local government information services are doing a good job at the moment, so that we can have better support rather than duplication?

Mr. Griffiths: I agree with the hon. Member that co-ordination in these various activities is indeed very essential, but I have no information that that co-ordination is lacking in these territories. I am prepared, however, to make further inquiries.

Oral Answers to Questions — MALAYA AND SINGAPORE

Chinese (Conscription)

Mr. Niall Macpherson: asked the Secretary of State for the Colonies how many Chinese liable to call-up have left Malaya since the system of conscription came into force; and how many of these received prior permission to do so and were given re-entry permits.

Mr. J. Griffiths: The information requested in the first part of the Question is not available, but several thousand Chinese in these age groups liable to call-up applied for "certificates of admission" during the first quarter of this year. Until

last year, "certificates of admission," which cannot be refused by law, were the only authority required by aliens resident in Malaya to re-enter the country, but visas are now required in addition. No permission is required to leave Malaya, but no re-entry visas have been or will be granted to persons leaving to avoid call-up.

Mr. Macpherson: Is it not a little difficult to judge in advance whether somebody is leaving Malaya with the object of avoiding the call-up? Will the right hon. Gentleman consider, in conjunction with the High Commissioner and the Governor of Singapore, the possibility of instituting some such system as this, in view of the length of time which very often elapses before re-entry permission can be obtained?

Mr. Griffiths: I do not think it will be too difficult to judge what is the reason for leaving Malaya. There is, so far as I imagine, no difficulty about a person who wants to leave giving the reasons why he is leaving. If he gives no reason, then I think it is a fair assumption that he is leaving to avoid the call-up.

Retirement Benefit Commission

Mr. Awbery: asked the Secretary of State for the Colonies the composition and terms of reference of the Retirement Benefit Commission recently set up in Singapore; if the trade unions were invited to nominate for this body; and whether it will cover both Government and non-Government workers.

Mr. J. Griffiths: I have not yet received full details of this body but will write to my hon. Friend when I am in a position to do so.

Mr. Awbery: Will my right hon. Friend consider consulting the Legislative Council of Singapore with a view to having a trade union representative on this Commission?

Mr. Griffiths: I will consider that matter when I have received the full details for which I have asked.

Rubber Estates (Protection)

Colonel Gomme-Duncan: asked the Secretary of State for the Colonies whether suitable arms and armoured vehicles will be provided free of charge


to estates in Malaya situated within the area of hostilities in order that they may play their full part in the war against Communism in that country.

Mr. J. Griffiths: No requests have been made to the Federation Government for armoured vehicles to be supplied free of charge to estates. Orders placed by rubber and tin companies for such vehicles are sponsored by my Department, and I understand that these orders have so far been fulfilled without delay. Purchase of vehicles with fixed armaments cannot be permitted for security reasons.

Colonel Gomme-Duncan: Can the right hon. Gentleman say whether the latter part of his answer refers also to arms, as opposed to armoured vehicles, and, further, whether, though these people have not asked for these supplies, as they are part and parcel of our efforts in Malaya they should be supplied automatically if necessary?

Mr. Griffiths: No request has been made, and I think they are content for this to be part of their contribution to the effort.

Air Commodore Harvey: Will the Minister check up on the information he has just given to the House, for when the Parliamentary delegation was in Malaya the situation was quite contrary to what he said? Many of the estates were having difficulty in getting armour plating to fit the vehicles and were extremely short of other equipment. Does the right hon. Gentleman realise that unless something is done the position of the planters who have been producing rubber for three years will deteriorate very rapidly?

Mr. Griffiths: I visited Malaya myself about the same time as the hon. and gallant Gentleman, and I am fully seized of the problem. The information I have given to the House is that provided for me now, but I will check up on it again.

Mr. Lennox-Boyd: Does not the Minister agree that it is not so much a squabble as to who pays that is disturbing people on the spot, but the availability of the material, which is much more important than who eventually foots the bill.

Mr. Griffiths: I would remind the hon. Gentleman that in recent months the Federal authorities concerned have found

it essential to recruit the people who live and work on the estates, and that is in many ways the most important part of their problem.

Oral Answers to Questions — WEST INDIES

Federation (Report)

Mr. Ralph Morley: asked the Secretary of State for the Colonies what steps are being taken to give effect to the proposals of the Closer Association Committee, promulgated in 1948, for the formation of a Federation of the British West Indies.

Mr. J. Griffiths: I would refer my hon. Friend to the reply which my right hon. Friend the Minister of State gave to my hon. Friend the Member for Accrington (Mr. H. Hynd) on this subject on 14th March. The position is unchanged.

Mr. Morley: Is my right hon. Friend aware that there is a great deal of disappointment in the West Indies over the delay in forming this federation and could he give some assurance that it is the definite intention of the Government to support the proposal for a federation and to hasten its formation?

Mr. Griffiths: We have commended the report to the consideration of all the Governments and peoples in the West Indies, and we have been waiting until they have had time to debate it. I am sorry to say that it has not yet been debated in British Guiana, Barbados, British Honduras or Jamaica, but we hope that they will take an early opportunity of discussing it.

Mr. Geoffrey Cooper: Is it not a fact that the rate and type of development in the various West Indian Colonies is so varied that it is thought in some quarters that federation is not going to help as much as some people imagine?

Mr. Griffiths: There are, I know, varying views about the proposals in the West Indies.

Leaf Scald Disease

Mr. Roland Robinson: asked the Secretary of State for the Colonies what have been the results of the investigation into the leaf scald disease in British Guiana made by Dr. E. V. Abbott, the plant pathologist from the United States


Department of Agriculture, who recently visited the Colony under the auspices of the Economic Co-operation Administration, and what steps it is now proposed to take to eradicate this disease.

Mr. J. Griffiths: Dr. Abbott has completed his investigations. He and Mr. Wiehe, a plant pathologist from Nyasaland, who has been seconded to British Guiana to supervise work on this disease, have jointly prepared a programme of control and research. Certain immediate control measures are being instituted.

Bahamas (Tourists)

Mr. Roland Robinson: asked the Secretary of State for the Colonies what was the number of tourists visiting the Bahamas during each of the winter seasons of 1948–49, 1949–50 and 1950–51; how many of these came from the United States of America and Canada; and what was the dollar value of this tourist trade in each year.

Mr. J. Griffiths: The number of tourists was 18,800 in 1948–49, 20,800 in 1949–50, and 37,500 in 1950–51. I regret that I am not able to give separate figures for tourists from the United States and Canada. It is estimated that the dollar value of this trade was 6 million dollars in 1948, 7 million dollars in 1949, 9 million dollars in 1950, and that it will be 10 million dollars in 1951.

Migration to U.K.

Mr. Gammans: asked the Secretary of State for the Colonies if he is aware of the increasing number of West Indians who are coming to this country to seek employment; how far he proposes to encourage this migration; and what steps he is taking to provide welfare services for them on arrival and to put them in touch with prospective employers.

Mr. J. Griffiths: I am aware that West Indians are coming here to seek work. It would hardly be in their own best interests to encourage this immigration since most of these men lack the special skills which would ensure their employment here.
I am satisfied that there is no need for special welfare services for migrants from the West Indies. The question of providing employment is a matter for my right hon. Friend the Minister of Labour

and National Service, but officials of his Department and mine are constantly in touch on this.

Mr. Gammans: As I gather from the right hon. Gentleman that he is not in favour of this immigration does he propose to do anything in the West Indies to discourage it?

Mr. Griffiths: I am not in favour of encouraging it because I do not want them to come here and find they cannot get a job and then feel frustrated.

Mr. Peter Smithers: Is the right hon. Gentleman aware of the tendency of these men to concentrate in the East End of London and of the dangerous social problems that arise from that? Is he in touch with the appropriate Departments on that matter?

Mr. Griffiths: Yes, Sir.

Mr. Sorensen: Is my right hon. Friend aware that this happens not only in the East End of London but in other parts and provides problems for numbers of social workers in these towns? Could something be done at the other end in connection with this problem?

Mr. Griffiths: This is not a new problem. There is a great deal of experience of it in ports like Cardiff and a very great deal of valuable social work is being done.

Mr. Donner: Are the Government doing anything to assist these West Indians or to advise them in any way as to how best they can return to the West Indies?

Mr. Griffiths: Yes, we are.

Mr. Awbery: Is my right hon. Friend aware that some employers in this country are advertising in West Indian newspapers that employment will be available for these people?

Mr. Griffiths: Perhaps my hon. Friend will bring any such instances to my notice.

Industrial Development

Mr. Gammans: asked the Secretary of State for the Colonies what has been the result of his inquiries regarding the possibility of industries being established or extended in the British West Indies to help in the re-armament programme.

Mr. J. Griffiths: Whilst His Majesty's Government are anxious to help the development of industry in the West Indies, the conclusion of the examination made is that, because of shortages of machine tools and raw materials, the possibilities of production specifically to meet the needs of re-armament are slight. Any practicable proposal that may be put forward would, however, receive sympathetic consideration by the authorities concerned.

Mr. Gammans: Does that mean that the Government are prepared to place re-armament orders in West Germany but not in our own Colonies? Is not this in the long run the best way to relieve the unemployment problem in the West Indies, instead of allowing people to come to this country where there is little hope of their finding a job?

Mr. Griffiths: I do not know why Germany was dragged into that question. I said that if any practicable proposal is put forward we will consider it.

Mr. Lennox-Boyd: Does it not follow from the right hon. Gentleman's answer that there is no strategic or security reason why secondary industries of this kind should not be encouraged in the West Indies?

Mr. Griffiths: The reason that at the moment we do not think it can be done is because of shortage of tools and raw materials, but if practicable proposals come from the West Indies we will consider them.

Barbados

Mr. James Johnson: asked the Secretary of State for the Colonies what are the results of seismographic surveys completed in the Island of Barbados; and when drilling operations for oil will begin.

Mr. J. Griffiths: I regret that the information requested is not available.

Mr. Johnson: Is my right hon. Friend aware that these islands are of the same geological formation as Venezuela and Trinidad, that an American called Phillips has surveyed these islands on behalf of a company and that many people think there is much oil there? Would he make the best effort to develop drilling in these islands?

Mr. Griffiths: Yes, but I would point out that information which is available to that company is not available to me.

Colonel Gomme-Duncan: In view of the fact that a very reputable British firm has been carrying out a survey in this island for a long time past, will the right hon. Gentleman make sure that when permits are given to carry on that firm will receive first consideration before a foreign firm?

Mr. J. Johnson: asked the Secretary of State for the Colonies whether the Governor of Barbados has yet initiated lgislation as requested by the House of Assembly for the purchase of a plantation known as Drax Hall for the breaking up into one acre plots; and how many other plantations of absentee proprietors there are which could be used for families in need.

Mr. J. Griffiths: I have no information about this matter. I am consulting the Governor and will communicate with my hon. Friend as soon as I have received his reply.

Mr. Johnson: Is my right hon. Friend aware that there are 700 needy families in the parish of St. George, and will he assure us that he will do his best to see that these land hungry peasants get a stake in their own country?

Mr. Griffiths: I have an interest in this matter and will certainly bear in mind the point made by my hon. Friend.

Antigua (Corn Meal Imports)

Mr. J. Johnson: asked the Secretary of State for the Colonies how much maize meal is imported from Canada by Antigua; how much is grown locally, and what mills are available for grinding maize; and whether they are used to their full extent.

Mr. J. Griffiths: About 1,300 tons of corn meal were imported by Antigua from dollar sources in 1950. There are no figures of local production, which is small. As far as I am aware, there are no private mills. The Government own a drier and mill which is not fully used. Its future is being considered.

Mr. Johnson: Is my right hon. Friend aware that the late Governor, Earl Baldwin, had much difficulty in moving


the local department of agriculture, and that there is machinery available for grinding maize? Would he get title local department of agriculture to move a little more quickly?

Mr. Griffiths: The future of the drier and mill in Antigua is now under consideration, as I indicated in my reply.

Oral Answers to Questions — COLONIAL EMPIRE

Development

Mr. T. Reid: asked the Secretary of State for the Colonies what steps he proposes to take in response to the recent proposal of United Nations economic experts to set up a United Nations Organisation Finance Corporation to lend money for the development of underdeveloped territories.

Mr. J. Griffiths: The Report entitled "Measures for the Economic Development of Under-developed Countries" prepared by a group of experts appointed by the Secretary-General of the United Nations, which I assume my hon. Friend has in mind, is to be debated at the 13th session of the Economic and Social Council of the United Nations, which meets on 30th July. While I welcome this study of the development of the underdeveloped countries of the world by the Council, it will finally be for the General Assembly of the United Nations to decide what action to take on this Report, in the light of the recommendations of the Council.

Mr. Reid: Are the Government in favour of taking up these reports and getting them acted upon in the United Nations?

Mr. Griffiths: The attitude we shall adopt is now under consideration, but my hon. Friend knows my views about this matter.

Mr. N. Macpherson: asked the Secretary of State for the Colonies whether he will make a statement on the grant of financial aid by the Economic Co-operation Administration for the development of British Colonial Territories; and what are the terms and conditions on which advances are made.

Mr. J. Griffiths: British Colonial Territories are eligible for E.C.A. aid for general economic development, for the

development of strategic materials and for technical assistance.
Aid for general development has until recently been limited to free grants to pay for essential equipment available only in the United States. The E.C.A. however, announced on 5th June the grant of financial assistance, amounting to 50 per cent. of the total cost, to eight projects in Colonial Territories. No conditions were attached to this assistance, other than that the projects will be completed.
E.C.A. assistance for the development of strategic materials is granted on a loan basis. A condition of the loan is normally that it shall be repayable in raw materials.
As regards technical assistance, in view of the very great shortage of technical experts, this is confined to recruitment for short term investigations, and surveys.

Mr. Macpherson: Could the Minister say whether any conditions regarding the employment of certain people are attached, and, secondly, in regard to the materials side, what are the conditions of interest on the loan?

Mr. Griffiths: In answer to the first part of the question, no conditions were attached to this assistance other than that the projects will be completed.

Mr. Donner: asked the Secretary of State for the Colonies to which Colonies, Protectorates and/or Trusteeship Territories the £2,750,000 grant from the Economic Co-operation Administration's special reserve fund for overseas development will be allotted; and whether he will publish a detailed statement showing the specific purposes for which these grants from Marshall Aid funds will be made in each territory.

Mr. J. Griffiths: E.C.A. has approved grants on the basis of a 50 per cent. contribution to the total cost of development projects in Sierra Leone, the Gold Coast, Nigeria, Tanganyika, Northern Rhodesia, North Borneo and British Guiana.
With the hon. Member's permission I will circulate the detailed statement for which he asks in the OFFICIAL REPORT.

Mr. Donner: Can the Minister say whether these grants are specially designed to supplement the British investment programme, or whether they are to be regarded as two wholly separate operations?

Mr. Griffiths: No, Sir, they are not regarded as separate operations. The grants are designed to supplement the investment programme.

Mr. Joynson-Hicks: Can the Minister tell the House the principles on which these grants are made, and how it is decided which of the territories shall benefit.

Mr. Griffiths: Perhaps the hon. Gentleman will put down that question, when I shall be glad to answer it.

Details of the projects and grants are as follows:

Sierra Leone: A grant of £75,000 for the construction of 10 new bridges to replace old and inefficient road ferries.

The Gold Coast: A grant of £500,000 for the construction of a rail link between Achiasi and Nwasam.

Nigeria: A grant of £162,500 for the expansion of the Enugu Collieries and a grant of £364,300 for the improvement and construction of a road from Kano through Maiduguri to the French Nigerian border.

Tanganyika: A grant of £600,000 for the construction of a road from Morogoro to Iringa.

Northern Rhodesia: A grant of £500,000 for the improvement of the road from Broken Hill to Tunduma on the Tanganyika border.

North Borneo: A grant of £340,150 for the construction of new wharves at Victoria, Jesselton and Sandakan.

British Guiana: A grant of £221,800 for the drainage and irrigation of an area for rice production.

Ex-Service Men's Conference

Mr. G. Cooper: asked the Secretary of State for the Colonies what facilities are being provided for the delegates to come to London for a conference on Ex-Service men's problems as arising in Colonial Territories, including British Honduras, and as proposed by the British Empire Service League.

Mr. J. Griffiths: The Conference is being arranged by the British Empire Service League and invitations to attend have been sent by the League to its branches in Colonial Territories. No request has been received for the grant of special facilities to the delegates beyond those which are provided by the League.

Mr. Cooper: Can my right hon. Friend say whether, in fact, some assistance has been offered to those who wish to come

as delegates, from Honduras in particular, and, as I have followed this matter during the last two or three years, can he say what steps are being taken to help these ex-Service men to solve these problems and to get their families resettled?

Mr. Griffiths: This is a conference which has been convened by the British Empire Service League, who are making all the arrangements.

Mr. P. Smithers: Is the right hon. Gentleman aware that the resettlement of ex-Service men in Jamaica is still not very satisfactory, and can he say whether there are any Jamaican delegates at this conference and whether he will take the opportunity of discussing the problem with them?

Mr. Griffiths: I shall be very glad to make arrangements to have the matter discussed with them either by myself or by one of my colleagues.

Oral Answers to Questions — UGANDA

Municipal Councils

Mr. Rankin: asked the Secretary of State for the Colonies when he proposes to introduce elections for the Kampala Municipal Council in Uganda; and what other towns in Uganda are large enough for municipal government.

Mr. J. Griffiths: Kampala was constituted a municipality as recently as 1st January, 1949, and it is considered that the introduction of elections at present would be premature. No other townships in Uganda are yet ready for municipal government, but at its present rate of growth Jinja might become ready for it within a measurable period.

Mr. Rankin: Would my right hon. Friend agree that the system of nomination for the new municipality, which I am glad to hear has been created, is not a good one? Will he say whether he proposes to continue the system of nomination, or will he as quickly as possible institute a system of election?

Mr. Griffiths: I can assure my hon. Friend that I regard the system of nomination as appropriate for the period of transition from the one to the other.

Electricity Board

Mr. Rankin: asked the Secretary of State for the Colonies why no African or Asian has been appointed to the Uganda Electricity Board.

Mr. J. Griffiths: There is an Asian on the Uganda Electricity Board. Members are appointed for their personal qualifications for the work of the Board, and not to represent racial or other interests.

Mr. Rankin: Am I to understand from the reply of my right hon. Friend that no African or Asian member has been appointed to the Uganda Electricity Board?

Mr. Griffiths: No, Sir. I said that there is an Asian on the Uganda Electricity Board, but at the moment not an African.

Executive Council

Mr. Rankin: asked the Secretary of State for the Colonies when he proposes to have an African member appointed to the Executive Council of Uganda.

Mr. J. Griffiths: At present, an official member of the Executive Council has a special responsibility for representing African interests, but the desirability of appointing an African to the Council is under consideration.

Oral Answers to Questions — FAR EAST (FILM PROPAGANDA)

Mr. Awbery: asked the Secretary of State for the Colonies (1) if he is aware that Russian and Chinese films with dialogues in the Chinese dialects, including newsreels about Korea with an anti-Western-democracy commentary are reaching numerous audiences in South-East Asia while few, if any, British films are produced in these dialects; and what action he is taking to counteract this propaganda in native dialogue;
(2) if he is aware that films with sound tracks in the Chinese and Malayan languages are the only films shown in cinemas for illiterates in Malaya; and if he will arrange for British films in these languages to be produced for showing in Singapore and Malaya.

Mr. J. Griffiths: The entry into British territory in South-East Asia of films of

the kind to which my hon. Friend refers is under control by the Governments concerned, who are fully alive to the situation.
Films with sound tracks in local languages are produced by the Malayan Film Unit. In addition, more than 35 films, and more than 50 individual items from the series "This is Britain," have been sent from this country to Malaya for the sound tracks in Malay, Chinese and Tamil to be incorporated. A new series of films entitled the "Democratic Way" designed for similar incorporation is also being undertaken.

Mr. Awbery: Is my right hon. Friend aware that the majority of the people of Malaya are unable to read and take their views entirely from the films, some of which are very unsuitable and do not display the British way of life? Will he consider the appointment of a propaganda man in this area who would conduct propaganda on the films and show the British way of life to the people of Malaya as it ought to be shown?

Mr. Griffiths: I think I have informed the House before that when I came back from Malaya last year I realised that this was one of the urgent needs, and, several months ago, I appointed Mr. Carleton Greene who has gone to Malaya for that purpose.

Mr. Godfrey Nicholson: When the right hon. Gentleman says that this sort of film is under the control of the local governments, does he mean that it is their business and that therefore he would not answer the Question, or does he mean that they are satisfactorily controlling them?

Mr. Griffiths: I think they are satisfactorily controlling them, and that that fact is obvious in Malaya.

Mr. H. Hynd: When selecting these films about the British way of life, will my right hon. Friend be careful not to choose films showing this House during an all-night sitting?

Mr. Profumo: Could the Minister arrange for some of the films about which he has spoken to be made available in the grand Committee Room so that we can judge for ourselves whether they are of a sufficiently high standard?

Oral Answers to Questions — KENYA

Elections

Mr. Sorensen: asked the Secretary of State for the Colonies, in view of the adoption of the single transferable vote for Zanzibar elections, whether this or some form of proportional representation is being considered for the Kenya elections of 1952.

Mr. J. Griffiths: No decision has been taken to adopt this form of vote for any elections that may be held in Zanzibar. No changes are contemplated in Kenya, except possibly in the case of the Asian community. Arrangements are being considered locally to ensure that the Muslim section secures a minimum of two seats. I cannot anticipate the result of these discussions.

Mr. Sorensen: Is my right hon. Friend aware that the principle of the single transferable vote or proportional representation has not been considered at all in Zanzibar, and can he say whether it is being considered now?

Mr. Griffiths: The matter has been discussed and discussions on it are proceeding now.

Mr. Sorensen: If in fact this particular form of election is being considered in Zanzibar, will it also be considered in Kenya as well?

Mr. Griffiths: No decision has yet been reached in other places, but in both those places it is being considered.

Prisoners (Punishment)

Mr. Sorensen: asked the Secretary of State for the Colonies whether the imposition of leg-irons and solitary confinement on two Europeans who escaped from Mombasa jail is a customary form of punishment; how many Europeans and non-Europeans, respectively, have been in leg-irons, manacles or have endured similar forms of punishment in Kenya prisons during the past 12 months; and if he will consider advising the Kenya Government to discontinue this practice.

Mr. J. Griffiths: Leg-irons and similar restraints are used not as a punishment but to prevent a violent prisoner hurting

himself or to restrain a prisoner suspected of contemplating escape. Solitary confinement may be awarded as a punishment for certain classes of prison offences. I am asking the Governor for the information requested in the second part of of the Question and will write to my hon. Friend when I have his reply. As regards the last part, I am considering the matter in consultation with my advisers.

Mr. Sorensen: While thanking my right hon. Friend for his reply, may I ask whether he agrees that it is most undesirable that a practice which has fallen into disuse in this country should still be used in some of our colonial areas?

Mr. Griffiths: I think I indicated in reply to a previous Question that I am giving attention to the whole problem.

Education

Mr. H. Hynd: asked the Secretary of State for the Colonies whether he will give the composition, powers and duties of district education boards in Kenya; and to whom they are responsible.

Mr. J. Griffiths: As the answer is rather long, I will, with permission, circulate it in the OFFICIAL REPORT.

Mr. Hynd: Can my right hon. Friend say whether those committees are responsible to the local education authorities.

Mr. Griffiths: Perhaps my hon. Friend will study the full answer I am giving, after which, if he likes, he can put down another Question.

Mr. Frederick Elwyn Jones: Can my right hon. Friend say whether there are any Africans on these education boards?

Mr. Griffiths: If my hon. Friend will study the very full details I am giving, he will find that his question is answered.

The composition of district education boards in Kenya is as follows:

The District Commissioner—Chairman.

An education officer—Secretary and Executive Officer.

Four representatives appointed by the African district council.

Four representatives of the school managers nominated by the Provincial Commissioner, with powers to invite persons whose knowledge and experience the board wishes to consult to attend as visitors, but not to vote.

2. The powers and duties of the boards are as follows:

(a) To prepare and approve all estimates of revenue and expenditure on education in approved intermediate day schools and primary schools in the district and to submit these to the African district council and to the Director of Education.
(b) To receive subventions from the Government and from the African district council concerned towards the capital and recurrent costs of such education.
(c) To receive school fees collected in such schools at the rates prescribed.
(d) To pay grants-in-aid to school managers in conformity with the Grant-in-Aid Rules and with approved estimates.
(e) To secure the carrying out of capital projects in conformity with an approved plan through such agents as it may appoint.
(f) To call for and collate such statistical financial and other reports as the Director of Education shall require.
(g) To advise the Director of Education on the progress and development of African education.
(h) To discharge any other function delegated to it by the Director of Education.

3. The boards are responsible to the Director of Education.

Mr. H. Hynd: asked the Secretary of State for the Colonies what further education is proposed for African children in Kenya who fail to pass the examination for the intermediate schools after a four-year primary course; and whether he is aware that about three-quarters of the African children are concerned.

Mr. J. Griffiths: Every effort is made to continue the education of these children on informal lines through community development, provision of literature and other activities. I am aware of the magnitude of the problem in Kenya and elsewhere and would assure my hon. Friend that it continues to receive my closest attention.

Mr. Hynd: As I gather from my right hon. Friend's reply that he himself is not satisfied with the position, is he aware there are no technical schools or other similar opportunities for these children, 75 per cent. of whom are left high and dry at the age of about 11 years? Does he consider that satisfactory?

Mr. Griffiths: I have come back from Kenya and Uganda conscious of the fact that perhaps the first priority is rapid expansion of technical education at every possible level.

Colonel Ropner: Is the Minister aware of the view of many education authorities in Kenya that it is a mistake in present circumstances to provide too high an education, the result of which is that these young people drift into the towns and very often remain unemployed?

Mr. Griffiths: That is not the problem. The problem is that technical education has been neglected even more than other forms of education.

Mr. H. Hynd: asked the Secretary of State for the Colonies how many of the posts of education officer and assistant African education officers in Kenya are to be filled by experienced African teachers who have returned to Kenya after taking education courses in this country.

Mr. J. Griffiths: None of the posts of education officer are reserved to Europeans, though one has been created specifically to be held by an African. It is impossible to say how many African teachers with the qualifications mentioned will come forward to fill these posts. The posts of assistant education officer are reserved for Africans, and as a result of the Beecher Report three such new posts have been created.

Mr. Hynd: While the posts have been created, will my right hon. Friend take special steps to try and give ample opportunity to the experienced African teachers who have returned from courses in the United Kingdom to secure those posts?

Mr. Griffiths: These posts will be for Africans.

Oral Answers to Questions — CYPRUS (MALARIA CONTROL)

Mr. Sorensen: asked the Secretary of State for the Colonies whether the stocks of D.D.T. in Cyprus are adequate; and what is the present progress of malaria control schemes in this Colony.

Mr. J. Griffiths: I have no information on the present stocks of D.D.T. in Cyprus, but I have been given no reason to suppose that they are inadequate. With regard to the second part of the Question, the anopheles eradication scheme was successfully completed in January, 1950. I am sending my hon. Friend a copy of Cyprus's last Annual Medical Report, which will give him further details.

Mr. Sorensen: Would my right hon. Friend make further inquiries in this matter because stocks of D.D.T. are becoming very short in Cyprus, and, obviously, that being so, there are the very gravest possibilities for the future?

Mr. Griffiths: My information is that the stocks are not inadequate. We are proud of the big job we have done in Cyprus in this field, and we are very anxious that it should be continued.

Oral Answers to Questions — AFRICAN AGRICULTURE (MECHANISATION)

Sir Richard Acland: asked the Secretary of State for the Colonies whether a machinery advisory bureau has been set up in Britain as recommended in paragraph 236 of the Official Report on problems of mechanisation of native agriculture in tropical African Colonies.

Mr. J. Griffiths: Plans for the establishment of a colonial agricultural machinery advisory committee are well advanced and I hope to make an announcement in the near future.

Oral Answers to Questions — CHINA (RUBBER IMPORTS)

Mr. Blackburn: asked the Secretary of State for the Colonies (1) what is the estimated value in pounds sterling of the exports of rubber from the British Colonies to Hong Kong, Makao and Dairen from the beginning of the Korean war to the end of April, 1951;
(2) what is the estimated value in pounds sterling of the exports of rubber from the British Colonies to China from the beginning of the Korean war to the end of April, 1951;
(3) what is the tonnage and estimated value of the exports of rubber from the British Colonies to China and Hong Kong, respectively, during the month of April, 1951.

Mr. J. Griffiths: As the answer is rather long and complicated, I will circulate it in the OFFICIAL REPORT.

Mr. Blackburn: Is the Minister aware that I am grateful to him for giving me a full and comprehensive answer upon this subject? Will he be willing next

week to answer any further questions which may arise?

Mr. Griffiths: I have answered Questions for this week; we will see about next week.

Following is the answer:

I regret that the full information to answer the hon. Member's Questions is not yet available. The Secretariat of the Rubber Study Group have however supplied figures which I regard as substantially correct.

They estimate that the total value of the exports of natural rubber from United Kingdom territories to China between the 1st July, 1950, and the 31st March, 1951, amounted to between £50 and £51 million. The value of April, 1951, exports to China from these same territories is estimated at £6 million. These totals exclude exports to Hong Kong but include re-exports from Hong Kong to China and Formosa. No separate estimates are available for the values of exports of rubber from United Kingdom territories to Dairen during the periods under reference, but exports from Hong Kong can be assumed to be included in the total figure given above.

During the period from 1st July, 1950, to 31st March, 1951, the total estimated value of natural rubber exports from United Kingdom territories to Hong Kong was between £27 and £28 million. The estimate for the month of April, 1951, totals £3 million. The bulk of these exports was re-exported to China and the value of re-exports has already been included in the estimate given above. The Rubber Study Group Secretariat further estimate that a small amount of rubber, worth less than £10,000, was re-exported from Hong Kong to Macao during the period from 1st July, 1950, to 30th April, 1951.

The tonnage of natural rubber exports from United Kingdom territories to China during April, 1951, amounted to 10,033 tons. Of this total 3,265 tons were shipped from Malaya and Singapore before destinational controls were imposed, and the remainder was re-exported from Hong Kong. Five thousand eight hundred and forty-six tons were exported from Malaya to Hong Kong in April. Of this total 4,511 tons had already been exported prior to 9th April.

Oral Answers to Questions — ROYAL NAVY

Retained Ratings

Captain Ryder: asked the Parliamentary Secretary to the Admiralty how many ratings who have completed their time for pension are still retained for naval duty; and whether they can be replaced by men on the Reserve who have not yet completed this 12 years' service.

The Parliamentary and Financial Secretary to the Admiralty (Mr. James Callaghan): About 1,000. Royal Fleet reservists with less than 12 years' active service could not replace these ratings.

Captain Ryder: In view of the fact that it causes great hardship to the individuals concerned, would the Parliamentary Secretary say which categories of ratings it has been found necessary to retain and why they cannot be replaced?

Mr. Callaghan: Generally speaking all categories are being retained. Commodores of barracks have standing instructions to release any senior ratings in any categories in which there may prove to be an overbearing from time to time.

Mr. Michael Foot: Is my hon. Friend aware that statements have appeared in the Press in the last few days that some of the men retained are to be retained for a longer period than the special call-up period of 18 months, and that these statements are being made despite the specific assurance he gave the other day on the subject? Will he take steps to try and remove the sense of grievance and hardship which these rumours have caused?

Mr. Callaghan: I saw it in one London newspaper, and I regret it. There is absolutely no truth in the suggestion that there is to be any extension of service beyond 18 months.

Commander Noble: How many men in the Royal Fleet Reserve will be available for call-up to replace these men?

Mr. Callaghan: The total number in the Royal Fleet Reserve which I published at the end of the year was about 20,000 to 24,000.

Commander Noble: Is it not a fact that only 6,000 of them have been called up?

Mr. Callaghan: Yes, that is true.

Submarines (Snorts)

Mr. Watkinson: asked the Parliamentary Secretary to the Admiralty what proportion of the submarines used in the recent naval exercise have been fitted with snorts.

Mr. Callaghan: Seventy per cent.

Mr. Watkinson: Will the hon. Gentleman try and work towards 100 per cent. as early as possible? Does the hon. Gentleman appreciate that any exercises which are held today with submarines which are not fitted with under-water breathing devices are somewhat unrealistic?

Mr. Callaghan: The hon. Member will appreciate that four nations are involved in these exercises.

Contracts (Payment)

Sir Waldron Smithers: asked the Parliamentary Secretary to the Admiralty what was the amount involved in the con tract recently placed with Messrs. Vickers-Armstrongs, Crayford; and why it was necessary to arrange payment on the instalment system.

Mr. Callaghan: Several contracts have been placed with this firm in the last few months, some of which provide for payment by instalments. This is a normal practice. It is not the custom to disclose the sum involved in any particular contract.

Sir W. Smithers: Are the Socialist Government so near bankruptcy that for the first time in history they have to pay for contracts on the instalment system?

Mr. Callaghan: I do wish the hon. Gentleman would listen.

Sir W. Smithers: I did.

Mr. Callaghan: This is a normal practice.

Sir W. Smithers: No, it is not.

Oral Answers to Questions — C.O.I. FILMS (POLITICAL MEETINGS)

Mr. Peter Thorneycroft: asked the Prime Minister whether he is aware that the Socialist Party, in the Monmouth Division of Monmouthshire, have been conducting their political campaign at public meetings with the assistance of


films apparatus and operators, made available to them free through the Central Office of Information; and whether he will give an assurance that these facilities will not be made available to any political party for the purpose of its public meetings.

The Secretary of State for Commonwealth Relations (Mr. Gordon-Walker): I have been asked to reply.
Yes, Sir, I am glad to give that assurance. Mobile projection units have recently been provided at their request to both the Conservative and Labour Parties in Monmouth on the well-established understanding that they were not to be used at propaganda meetings. I am told that while no political speeches were made, some of the Labour meetings were open to the public. I am satisfied that these arrangements were made in good faith and that no harm was done. No political propaganda was made at these meetings. I have repeated the instruction that these film shows must be restricted to private meetings of party members in all cases.

Mr. Thorneycroft: Is the right hon. Gentleman aware that I have never had anything to do with the Central Office of Information but these films were made available to my political opponent to advertise the public meetings and were used for the purpose of Socialist propaganda in my division? Is it not intolerable that public money should be used by any party for propaganda purposes?

Mr. Gordon-Walker: These films were made available to both the Conservative and Labour Parties. There was in this case a technical departure from the understanding that when this is done the party meetings must be closed to all but party members. In fact no political speeches were made at the meetings in question and they were attended almost entirely by Labour Party members. The hon. Gentleman said that he has had no contact with the Central Office of Information on this matter—

Mr. Thorneycroft: I did not say anything of the sort.

Mr. Gordon-Walker: I think the hon. Gentleman said it. In any case, if he did not say it I want to say what I was about to say.

Mr. Churchill: rose—

Mr. Gordon-Walker: If I may be permitted to complete my answer, the Conservative Central Office for Wales and Monmouth did tell the Welsh Office of the Central Office of Information about this. They were asked to supply details so that further inquiries could be made, and they have not done so.

Mr. Churchill: If my hon. Friend did not utter the particular sentence to which the right hon. Gentleman referred, how was it that it came to figure in his brief?

Mr. Gordon-Walker: Because I naturally supply myself with all the possible information to enable me to cope with all possible supplementaries.

Mr. Thorneycroft: Is the right hon. Gentleman aware that the slightest inquiry at all made by his local officers would have disclosed that over a period of weeks the campaign of my political opponent was based upon film shows which were put on free by this organisation, and if the rule is as the right hon. Gentleman stated, his officers have been extremely lax in this matter which is one of party prejudice?

Mr. Gordon-Walker: I totally deny that allegation. Of course, we have made inquiries and it is quite untrue that there was any sort of propaganda campaign.

Mr. Churchill: The right hon. Gentleman is not dealing with Tshekedi now.

Mr. Gordon-Walker: I happen to be dealing with the Question on the Order Paper. No political propaganda campaign at all was made around these film shows. There was, I admit, a technical breach in that some people other than Labour Party people were present at these meetings.

Mr. Thorneycroft: They were invited.

Mr. Gordon-Walker: A few attended. No political speeches were made at all. There has been a technical breach and I have taken steps to see that it will not happen again.

Mr. Peter Freeman: Is it not a fact that these films show the growing prosperity in Monmouthshire which seems to be regretted by the hon. Member concerned?

Mr. Gordon-Walker: The films are not political, and the same sort of films have been used by the Conservative Party in Monmouth.

Oral Answers to Questions — COUNCIL OF EUROPE (MINISTERIAL REPRESENTATION)

Mr. Mott-Radclyffe: asked the Prime Minister why it was decided that no Minister of His Majesty's Government should participate in the deliberations of the Consultative Assembly of the Council of Europe for the year 1951–52.

The Prime Minister (Mr. Attlee): As the House is aware, the constitutional position in the Council of Europe is that the Assembly is a purely consultative body, on which representatives of the various member States speak and vote in a personal capacity without in any way committing the Governments of those States, or necessarily reflecting their views. Experience has shown that in an Assembly of this kind, private Members can more appropriately take part than Ministers who will naturally be assumed to be committing their Government to a particular course of action.

Mr. Mott-Radclyffe: Since France, Italy, Greece and Belgium all have Ministers on their delegations to Strasbourg, could the right hon. Gentleman explain whether the withdrawal of any member of His Majesty's Government from the British delegation indicates that he thinks the Council of Europe is no longer of such importance as to warrant his being there?

The Prime Minister: No, the reason is the reason which I have given. The constitutional position is very different in Continental countries.

Mr. Harold Macmillan: In view of the fact that out of these delegates there were altogether 15 Ministers from different countries, does not the right hon. Gentleman think it a pity that there should be no experienced senior members of Ministerial rank from the Labour Party? May I add how much we have missed the Minister of Local Government and Planning?

The Prime Minister: My right hon. Friend will be very grateful for that remark.

Mr. Churchill: Is it not a fact that this abstention of ministerial representation on the Consultative Committee is only another example of the steady attempt to vitiate the cause of a united

Europe, unless it is a Socialist united Europe which has been pursued by the right hon. Gentleman during the whole of his tenure?

The Prime Minister: The right hon. Gentleman is entirely wrong. The whole basis of representation is that individual members should speak in an individual capacity, and, as the right hon. Gentleman would find out if he was in office, there is an obvious difficulty in having Ministers there owing to the confusion as to whether what is spoken by a Minister is spoken as a member of the Government or in an individual capacity.

Mr. Churchill: If that difficulty has been faced and overcome by all the other Governments concerned, including some Governments which have Socialist majorities or large Socialist parties, why is it impossible for us to have a similar procedure?

The Prime Minister: As I have already mentioned, the constitutional position on the Continent is different from what it is in this country.

Mr. Edelman: Is it not the case that His Majesty's Ministers, unlike several leading Members of the Opposition, are unwilling to speak with one voice in Strasbourg and in a different voice in this country?

Hon. Members: Hear, hear.

Mr. Churchill: That may raise loud cheers from people who are hard up for cheer. May I ask the Prime Minister whether it does not remain a fact that we were the only one of these Governments who could not solve the problem of ministerial responsibility and representation of independent members upon this body? The position occurred in other countries besides this.

The Prime Minister: rose—

Mr. Speaker: We cannot debate the matter. Mr. Langford-Holt.

Oral Answers to Questions — RESEARCH SCIENTISTS (SCREENING)

Mr. J. Langford-Holt: asked the Prime Minister what inquiries are made in the countries of origin of scientists before they are employed on official research of a secret nature.

The Prime Minister: Inquiries into an alien scientist's background and associations are made in his country of origin whenever it is practicable to do so.

Mr. Langford-Holt: Is the right hon. Gentleman aware that, especially since the case of Professor Pontecorvo, there has been growing disquiet in the country and a feeling that wholly insufficient inquiries are made? The right hon. Gentleman the Secretary of State for Commonwealth Relations said screening had been tightened up since that case. Could the Prime Minister now say what that tightening up consists of?

The Prime Minister: Obviously I cannot give details of that. Inquiries are made wherever possible in the country of origin but at times, especially during the war, it was quite impossible to make inquiries, and such alien scientists as there are were mostly taken on when they were refugees from oppression in other countries, when those inquiries could not be made.

Mr. P. Thorneycroft: Would the right hon. Gentleman agree that if an Italian professor with that amount of knowledge was going to stay with relations in Northern Italy even the veriest amateur would have made some inquiries?

Mr. Churchill: Is it not a fact—and I do not think the Prime Minister will disagree with this—that the line in the deadly cleavage is not now drawn by nationality but by the line between the Communist and the non-Communist world?

The Prime Minister: I think the right hon. Gentleman is quite right in that.

Mr. Langford-Holt: Do we understand from the Prime Minister's reply that, following the new cleavage which my right hon. Friend has mentioned, no fresh inquiries have been made either about Professor Pontecorvo or other scientists of that sort?

The Prime Minister: Perhaps if the hon. Gentleman wants to ask a question about a specific point he will put it down.

Oral Answers to Questions — SUSPECTED SABOTAGE

Mr. Gammans: asked the Prime Minister if he is aware of the increasing concern at the number of acts of suspected

sabotage in Service establishments for which no arrests have been made and the disappearance of prominent servants of the Crown likely to be in possession of confidential information; and what steps he proposes to take to improve the efficiency of the security services.

The Prime Minister: I do not accept all the implications of the first part of this Question, and I would refer the hon. Member to the reply which I gave to the hon. Member for Cheadle (Mr. Shepherd) on 3rd May.
As regards the second part of the Question, I have no statement to make; but those responsible are always on the lookout for means of raising still further the high standard of efficiency of these services.

Mr. Gammans: Does the Prime Minister realise how long is this list? There is the explosion at Portsmouth, many cases of suspected sabotage in the Navy, the fire at Aldershot, the disappearance of scientists and so on. Does he not feel it is essential, both at home and abroad, to restore the prestige of our security services, and can he assure the House that that is being done?

The Prime Minister: Yes, but at the same time the hon. Member will realise that once there is a case of suspected sabotage then every other incident occuring is always apt to be put down to sabotage. There is no proof of sabotage in a number of these cases, and in a number of other cases, where such have taken place, there is no reason to believe that they have come from any subversive activity. But they are being very fully investigated and every precaution is being taken, although it would be quite unwise and wrong for the hon. Member to suggest that there is widespread sabotage.

Earl Winterton: Is the right hon. Gentleman aware that there is profound disturbance in the country over this matter, which is really not a party matter, of course, because presumably hon. Members opposite and, indeed, Members of the Government must be as much concerned by certain recent events as many of us on this side of the House? Will he consider whether it would not be proper at some future date to publish a White Paper on the whole subject, because something should be done about this to reassure public opinion?

The Prime Minister: Certainly, but hitherto it has not been possible to bring clear evidence of sabotage in these cases. Where any case is proved, there will, of course, be the fullest publicity but one cannot do it where it is merely a matter of suspicion. I have myself seen suggestions of sabotage made when it was obviously quite out of the question.

Mr. Foot: Is it not a fact that in the case of two or three recent alleged examples of sabotage in the Royal Dockyards, where the Admiralty originally suspected sabotage and spoke of it as sabotage, it has since been proved not to have been sabotage at all; and is it not a fact that there is practically no instance, certainly of any widespread sabotage having occurred in the Royal Dockyards?

The Prime Minister: I think that is so.

Mr. Joynson-Hicks: Is it not a fact that no incident is designated as a case of suspected sabotage until it is found that there is no other explanation available for it?

Oral Answers to Questions — ARMED FORCES

Korea (Chinese Equipment)

Mr. Llewellyn: asked the Minister of Defence whether he will publish details of types of equipment abandoned by the Chinese in North Korea and captured by the United Nations forces indicating the country of origin of each.

The Minister of Defence (Mr. Shinwell): No, Sir. While we have plenty of information about the different types of equipment used by the Chinese Communist forces which has now fallen into our hands, I do not think it would be in the public interest to publish details. Much of the equipment was originally captured by the Chinese Communist forces from the Chinese Nationalist forces or from the United Nations forces themselves. The equipment is of miscellaneous origin and includes items of Japanese, Russian, American and German manufacture.

Mr. Llewellyn: Will the Minister say why he does not consider it to be in the public interest that the people of this country should know with what weapons and supplies our own people are being shot down?

Mr. Shinwell: If information about types of captured equipment could be confined to the people of this country, that would be all right; but it is not desirable—that is the opinion of my military advisers—that some other countries should know.

Mr. Emrys Hughes: Is the Minister aware that at the inquiry in the United States a document was published showing that a very large quantity of guns, mortars and all kinds of munitions of war had been captured by the Chinese from the Americans? This is all to be found in "The New York Times" of last week, and it is just as probable that our soldiers and American soldiers are being shot down by munitions and guns produced in the United States.

Air Commodore Harvey: Will the Minister of Defence say whether the Russian type of fighter, the MIG.15, has been captured? I do not ask for details, but has such an aircraft been captured?

Mr. Shinwell: I think not.

.280 Rifle

Brigadier Head: asked the Minister of Defence which of the Dominions has agreed to change over to the.280 rifle.

Mr. Shinwell: The question is now under consideration by the various Commonwealth Governments.

Brigadier Head: Is it not already a fact that the Dominion of Canada is retaining the same calibre as the United States? Will not this have a most unfortunate effect on unity in Imperial defence, and does it not mean that, in future, Canadian formations will have to fight shoulder to shoulder with American rather than British formations?

Mr. Shinwell: It may be regarded as regrettable that Canada has decided to adopt the United States weapon, which, of course, has been in existence for a long time, but I hardly think it can be said that this will disrupt unity in Imperial defence.

Mr. Churchill: Is it not a fact that to re-equip the British Army with the.280 will take a matter of 10 years or so? During all that time we shall have cut ourselves out of the opportunity of adopting a weapon which is being adopted by


the United States and Canada, essential to any good system of defence, and besides that we have the great disadvantage not only of being isolated but of having a dual armament in our own forces.

Mr. Shinwell: It is not very long since the right hon. Gentleman himself said that the existing rifle, the.303, was a very good one and that we saved our lives with it. We shall continue with that rifle until the other rifle is ready. Of course, it may take 10 years before the British Army is fully equipped with the new rifle, but we shall gradually equip it, and meanwhile, we shall use the other rifle, which the right hon. Gentleman himself said is a very good one.

Mr. Churchill: I am very glad to have the assurance that the jigs and gauges by which the.303 is made are not to be taken away and dispersed and that the mass production of the.303 to keep our Army properly equipped is to be provided. If I could have that assurance it would greatly affect my point of view. Can the right hon. Gentleman give us that assurance?

Mr. Shinwell: Yes, we are not producing large numbers of the old rifle at present because we have very large numbers of them available. Of course, we shall continue in production if more rifles are required. We do not intend to do away with the present machinery for that purpose. However, I must remind the right hon. Gentleman and tell the House that we must have the very best weapons for the British Army, and that is our intention.

Mr. Churchill: May I ask the right hon. Gentleman to consider in his study of this matter of the best that, while it is no doubt right to have the best weapons, the best includes also those which enable us to work with other members of the Commonwealth and with other countries with whom we are allied, as well as actual improvement in the rapidity of fire, etcetera?

Mr. Shinwell: It must not be assumed that other Commonwealth countries are disinclined to use the rifle that is now being adopted by the British Army. The matter, in fact, will, I think, be discussed at the forthcoming Commonwealth Defence Conference.

Mr. Churchill: I am glad to hear that it will be discussed at the Commonwealth Conference, but are we to understand that this is not a decision of the British Government that is a foregone conclusion, and that they will be influenced by the discussions that take place there?

Mr. Shinwell: As regards the acceptance of this rifle, which is regarded on all hands, even in the United States, as militarily acceptable, we have made up our minds to produce the rifle as soon as we can find it possible to do so.

Mr. Churchill: rose—

Hon. Members: Oh.

Mr. Churchill: Are we to go on producing the necessary numbers of our own existing pattern, and, at this time of great pressure in re-armament, to make a great effort to produce this entirely new and isolated type of weapon?

Mr. Shinwell: Surely the same argument could be adduced against the production of other new weapons. [HON. MEMBERS: "No."] It is all very well for the right hon. Gentleman to live in the past, but we have to look to the future.

Mr. Henry Hopkinson: Is the Minister aware that the only item of common use among the Allies in Korea at this present time is petrol, and, having regard to the great disadvantages which have been caused in Korea through this lack of standardisation, will he re-examine this whole question of the supply of a rifle for the use of our Commonwealth partners and our Allies?

Mr. Shinwell: As regards the principle of standardisation, I am wholly in agreement. Obviously, we all desire standardisation; but I must tell hon. Members that standardisation can be achieved only if all the parties concerned are in agreement, and if some of the parties are disagreeable, obviously we cannot promote standardisation.

Mr. Duncan Sandys: Does the Minister of Defence not realise that the choice of an entirely new calibre for the new weapon—I am not talking about the new weapon but of the new calibre—has the effect of giving the worst possible lead to all nations—[HON. MEMBERS: "No."]—in this sphere of standardisation? Whilst the.280 may be ballistically a very


excellent calibre, does he not feel that the practical disadvantages of having a different calibre from our Allies, and having two calibres in our own Army, outweigh the technical advantages?

Mr. Shinwell: Well, I must confess that I am not so technically well equipped as the right hon. Gentleman—[HON. MEMBERS: "Hear, hear."]—but if I have to choose between the right hon. Gentleman and my military advisers at the War Office in this matter, I shall choose my military advisers.

Oral Answers to Questions — CLASS Z RESERVE (DEFERMENTS)

The following Question stood upon the Order Paper:

102. Mr. SYDNEY SILVERMAN,—To ask the Secretary of State for War why deferment of the training period of Mr. K. Spence, 154, Napier Street, Nelson, Lancashire, and Mr. N. Gee, 129, Pine Street. Nelson, Lancashire, both Class Z reservists, has been refused, in view of the fact that each of them is a young married man whose wife is expecting her first baby within the period for which he has been summoned.

The Secretary of State for War (Mr. Strachey): With your permission, Mr. Speaker, and that of the House, I should like to answer Question No. 102.
I have now decided that, if Class Z reservists who can furnish evidence that their wives are expecting their first babies within the period for which they are due to be called up apply to the appropriate Record Office, the date of their call up will be altered or, if this should not be possible, their call up will be cancelled. This is a new decision, and Z reservists whose appeal on these grounds has been disallowed should re-apply. This decision will, of course, apply to Mr. Spence and Mr. Gee.

Earl Winterton: On a point of order. I should like to seek your Ruling, Mr. Speaker, on a matter which, I think, is of some importance. In seeking your Ruling I do not imply any criticism of the Chair; but what is the proper procedure when a Member or a Minister thinks it desirable that a Question should be answered? What is the criterion? For example, suppose one of us has a Question which is

not reached, have we the right to come to you and ask that it shall be answered? I do not remember this system by which Ministers get up and state "With permission, I will answer this Question, which has not been reached." Possibly you can given consideration to this matter, and give a considered Ruling for the future?

Mr. Speaker: I will, but my impression for the moment is that the Minister is entirely responsible. However, I will look it up and make certain.

Earl Winterton: Yes, but with great respect, Sir—[HON. MEMBERS: "Oh."] I am perfectly entitled to seek this guidance. It affects the privileges of the House. May I say, Mr. Speaker, that I hope that, in giving consideration to the matter, you will have regard to the fact that in the past Ministers have not been the judges, so far as I am aware, of whether, when a Question has not been reached, it should be answered or not? It seems to me to introduce a slightly dangerous principle.

Mr. Speaker: I will consider it, but that was my impression. Anyhow, I can look into it.

Mr. Silverman: Will my right hon. Friend bear in mind that the new decision which he has announced in the answer that he has just given will be welcomed, I think, by every Member of the House and by the country at large as removing what has become—in a small number of cases—a serious grievance that has been causing a good deal of hardship? Will he bear in mind that the decision will be gratefully accepted by the country? May I also ask—[HON. MEMBERS: "Speech."]—whether, in the cases of the two persons who are named in the Question it will be necessary for them to make a new application, or whether their notices—[HON. MEMBERS: "Oh!"] I want to ask my right hon. Friend whether, in the cases of the two people who are named in the Question, it will be necessary for them to make a new application, or whether their call-up notices—[HON. MEMBERS: "Speech."]—will be cancelled? [Interruption.]
On a point of order. I am anxious to ask the Secretary of State a question which, I think, is an important one. I am anxious that you, Mr. Speaker, shall hear what it is, and I am anxious that my right hon. Friend shall hear, so that he will be able to answer. Is there any way


of preventing this constant background of muttering intervention, which is as harmful to the House as it is evidence of the consistently bad manners of the Opposition?

Mr. Speaker: The hon. Gentleman is slightly provocative in his statement. [An HON. MEMBER: "What about Members opposite?"] Yes, I know. I hope the hon. Gentleman will be as short as possible in asking his question because—

Mr. Silverman: rose—

Mr. Speaker: Order! I am still on my feet; and the hon. Gentleman must wait, for I have not stopped talking. Let me tell the House that there are two Private Notice Questions to come, that then there is to be a statement by the Colonial Secretary, and that then there is a Private Notice Question to me after that, so that it will be some time before we get to the Orders of the Day.

Mr. Silverman: Further to that point of order. The only reason why my question seems unduly long, Sir, is that, so far, I have had to repeat it three times without being able to conclude it. I now propose to ask it again and I shall go on asking it until it can be heard.

Mr. Speaker: We must be reasonable about this matter. The hon. Gentleman says, "I shall go on asking it until I get an answer," but, after all, I have to keep order. I quite understand that the hon. Member is also a little annoyed at the interruptions he has had. I am asking the House to get on with business quickly.

Mr. Silverman: What I said was that I shall ask my question as soon as it can be heard, and not before. I am asking my right hon. Friend whether, in the case of the two people mentioned in the Question, they must renew their applications or whether, in the procedure he announced when he gave his answer, their call-up notices will be automatically cancelled.

Mr. Strachey: I think they had better apply, like everyone else.

Commander Noble: Would it not have saved a great deal of time if the right hon. Gentleman had given a Written answer to this Question and left the rest to his public relations officer?

Mr. Strachey: I considered that as this was a new decision which applied retrospectively to a certain number of cases that have already been turned down it was important that it should get the maximum attention.

Miss Bacon: Would my right hon. Friend consider extending this decision to apply in the case of children other than the first, having regard to the fact that where there are other young children in the house there is considerable hardship?

Mr. Strachey: All these cases are, of course, considered on their merits on compassionate grounds if there is difficulty in looking after the children, but I do not think we can extend this decision as a principle to other cases.

STEVENAGE DEVELOPMENT CORPORATION (CHAIRMAN'S DISMISSAL)

Mr. Eden: (by Private Notice) asked the Minister of Local Government and Planning whether he will make a statement about the termination of Mrs. Felton's membership of the Stevenage Development Corporation.

The Minister of Local Government and Planning (Mr. Dalton): Yes, Sir. I have dismissed Mrs. Monica Felton from her post as Chairman of the Stevenage Development Corporation and from membership of the Corporation, because, in my judgment, she is unfitted to continue to hold this appointment.
She was warned as long ago as 20th March last that the Public Accounts Committee of this House would require her presence on 7th June in order to answer questions regarding the Stevenage Development Corporation. She failed to appear before the Committee on this date, not having returned from her travels abroad. I understand that the failure of a witness to appear before this Committee, except on grounds of ill-health, is without precedent. It is, in any case, a grave discourtesy to this House. In my view, it was Mrs. Felton's duty to subordinate all other arrangements, whether public or private, whether at home or abroad, to this summons from the Public Accounts Committee.
When Mrs. Felton left England on 29th April, bound for North Korea, I


had received no information that she intended to go abroad. Nor had she informed the Deputy Chairman of the Stevenage Development Corporation, Mr. J. Corina, nor the General Manager of the Corporation, General A. C. Duff. She thus made no arrangements for the carrying on of her duties during her absence. She was absent from a meeting of the Corporation on 29th May, no reason having been given either to the Deputy Chairman or the General Manager. They had no knowledge of her movements apart from Press reports that she was in the Far East. The Corporation met again yesterday. I instructed Mrs. Felton not to attend this meeting, as I was giving consideration to her position as Chairman.
I consider that she has shown neglect of duty which renders her unfit to continue to hold the post from which I have dismissed her.

Mr. Eden: There is one point on which I hope that the right hon. Gentleman can enlighten us. I understand that Mrs. Felton went on this journey without his knowledge or the knowledge of those who were her immediate superiors in the work she was doing. Can he tell us whether any facilities were granted to her by the Foreign Office or any other Government Department to carry out this journey; and how it comes about that a person in that position should have been making this particular journey in a territory against which our armies are fighting, without, of course, paying a courtesy call on the British troops on the other side of the line?

Mr. Dalton: I have no knowledge about that point. That is a question which should, I think, be addressed to the Foreign Secretary, but I did state that she left without my being informed. I wish to add that my departmental duty is to secure the efficient administration of new towns. From that point of view it is a matter of total indifference to me whether Mrs. Felton was absent in Hollywood or the Riviera or anywhere else. The point to me is that she was absent, and neglected her functions.

Mr. Eric Fletcher: May we take it from what my right hon. Friend has said, which has thrown a good deal of new light on this matter, that the dismissal of Mrs. Felton is not related in any way to

her presumably perfect right to express her views to the Press.

Mr. Dalton: She neglected her duty to the New Town Corporation.

Sir Peter Macdonald: Will inquiries be made into the circumstances under which this woman was appointed to this very responsible position? Is it not a fact that this woman has held Communist sympathies all the time she has held this and other posts under the Government?

Mr. Dalton: I have no reason to think so, and even if I did it would be totally irrelevant to my decision.

Mr. Bellenger: As my right hon. Friend has stated that this lady was guilty of a grievous dereliction of duty, might I ask whether her appointment was a full-time one and whether her salary was in operation until the date when he dismissed her?

Mr. Dalton: The appointments of all chairmen of new town corporations are part-time appointments. Mrs. Felton's salary, which is £1,500 a year, was paid up to yesterday, when it ceased.

Mr. Eden: I think the House generally will recognise that normal travel abroad and the free expression of opinion are not matters for this House to consider, but is the right hon. Gentleman sure that it is in order for a Government official to travel abroad on a visit to enemy territory, or a matter of that kind? Is not that the concern of the Government?

Mr. Dalton: I chose my words very carefully. I spoke of my own departmental responsibility. What I said, and what I repeat, is that my departmental responsibility is to secure the efficient management of new towns, and the reasons Mrs. Felton has been dismissed by me are the reasons given in my answer. Incidentally, she is not a Government official.

Mr. Eden: Will the right hon. Gentleman accept it from me that it is hard for many of us to believe that the reasons were limited to the answer which he has given?

Mr. Speaker: Hon. Members will be aware that, although it is unofficial, this subject is down for debate on the Adjournment, I think tomorrow night.

Mr. Godfrey Nicholson: On a point of order. I wish to make it quite clear that I entirely agree with the steps taken; but is it not a fact that the proceedings of a Select Committee or what happens at a Select Commitee are privileged and must remain confidential until the proceedings of that Committee have been reported to this House, and is it not important that that rule should be maintained?

Mr. Speaker: Perhaps a report has been made to this House; I have no knowledge about that. I am afraid I cannot answer that question without notice.

Mr. Godfrey Nicholson: As a matter of principle, Mr. Speaker, will you not confirm that the proceedings of any Select Committee are privileged until they have been reported to the House?

Mr. Speaker: That is perfectly true. Proceedings that are not reported to the House are not to be mentioned.

Mr. McAllister: On a point of order. I am sure that the House will be delighted with the assurance of my right hon. Friend that the dismissal of Mrs. Monica Felton was on the grounds of Departmental responsibility and her neglect of duty—[Interruption.]—and that no question of the views she expressed on return from her journeys abroad was involved in the decision that was reached.

Mr. Speaker: That is not a point of order; nor may one make speeches, but only ask questions.

Mr. McAllister: I apologise. May I ask the right hon. Gentleman whether he does not agree with me—[HON. MEMBERS: "Order."] I wonder Mr. Speaker, if I might make it clear, in an aside to hon. Members opposite, that I am not raising a point of order. I am rising to ask a question. The question I should like to ask my right hon. Friend is this: Does he not agree with the right hon. Member for Warwick and Leamington (Mr. Eden) and with myself that the House and the country will be left in the gravest doubt whether this is not one of the gravest attacks on civil liberties that we have seen, and is my right hon. Friend not aware that one point in his statement is not entirely accurate and that Mrs. Monica Felton did in fact inform the

General Manager of the Stevenage Corporation that she was leaving on foreign travel?

Mr. Dalton: Nobody who reads my answer will fail, I hope, to understand it. I repeat yet once more that the reason for the action I have taken is to prevent the affairs of the new town from being mismanaged through neglect of duty—that, and only that.

Earl Winterton: On a point of order. Mr. Speaker. My hon. Friend the Member for Farnham (Mr. Nicholson) has raised a most important question affecting the whole position of Select Committees. May I put it in this form: Perhaps you would look into the matter because, so far as I am aware, there is no previous instance of a Minister announcing to the House an action which has taken place in Select Committee. [Interruption.] It is no use hon. Gentlemen opposite getting angry. This is a matter which affects the rights of the House and is not a party matter at all.
I should like you, Mr. Speaker, to look into the matter, because I understood you to say, in reply to my hon. Friend, that it was quite true that the proceedings of a Select Committee could not be disclosed in this House without the permission of the Chairman of the Select Committee; in other words, without a statement to the House by the Chairman of the Select Committee. I am not making any criticism of the Minister, but here is an announcement that something has happened in a Select Committee—[HON. MEMBERS: "No."] Certainly. I am raising a point of order. I am not the least concerned about the opinions of hon. Gentlemen opposite; I am speaking to Mr. Speaker. I should like you, Mr. Speaker, if you will, to look into this matter.

Sir Ian Fraser: Sir Ian Fraser rose—

Earl Winterton: Can you give a decision, Mr. Speaker?

Sir I. Fraser: Further to the point of order, may I ask you, Mr. Speaker, to consider whether the non-appearance of a witness is a proceeding?

Mr. Speaker: I have been asked to consider these various matters. All I can say is that I will consider them. I cannot give an answer now.

Mr. Woodburn: During your consideration of this matter, Mr. Speaker, will you consult Rulings given during the war with regard to the Select Committee on National Expenditure, where it was ruled that witnesses giving evidence or asked to give evidence must inform their Minister; that it was no longer the right of a Select Committee to ask Departmental chiefs or anyone representing a Ministry to come here without the knowledge of the Ministry; and therefore the Minister must know what people in the charge of his Department are doing?

Mr. Speaker: I will have the matter looked into. I shall have all these points considered and let the House know.

Mr. E. Fletcher: Would you consider one other point, Mr. Speaker. As you indicated, the dismissal of Mrs. Monica Felton is the subject of the Adjournment debate one day this week. I had previously understood that a Question by Private Notice could not be put if the matter was coming up in the immediate future on the Adjournment. Would you therefore, Mr. Speaker, be good enough to indicate to the House the circumstances in which Questions like these can be asked by Private Notice?

Mr. Speaker: This matter, as I said, is being raised on the Adjournment by, I think, the hon. Member for Eastbourne (Mr. C. S. Taylor). He may change the subject. It is only unofficial. It is merely for the guidance of Members. It is at the back of the Chair, and it is not on the Order Paper, and therefore the subject does not rule out Questions, as suggested by the hon. Member for Islington, East (Mr. E. Fletcher).

LONDON SHIPS' CLERKS (RESUMPTION OF WORK)

Major Sir David Maxwell Fyfe: (by Private Notice) asked the Minister of Labour whether he can make a further statement on the strike at the London Docks?

The Minister of Labour (Mr. Alfred Robens): I am glad to be able to inform the House that at an official meeting called by the unions today, the men decided on a full resumption of work tomorrow morning.

Sir D. Maxwell Fyfe: May I ask the right hon. Gentleman two points on which I think there is considerable disquiet? First, can he tell us whether the strike which has just concluded has caused wastage of foodstuffs, especially meat. The second point is a wider one, but I think that it is again a point of concern to Members on both sides of the House. Will the right hon. Gentleman assure us that the Government will be ready before the Summer Recess to inform the House of their attitude to the Leggett Report on unofficial stoppages at the London Docks, and what action they propose to take with regard to the recommendations of the Committee?

Mr. Robens: I am not aware that any wastage of food has taken place. Meat, of course, will be in special refrigeration ships, and there will be no wastage from that angle. With regard to the Leggett Report, I can tell the House that we have already taken action on that Report, and discussions are taking place with all interested parties. I hope to be able to make some statement in due course.

Mr. Peter Thorneycroft: Can the right hon. Gentleman say, now that the strike is settled, whether he was helped or hindered in his negotiations by a statement on the tape on Monday evening that his predecessor in office, the right hon. Member for Ebbw Vale (Mr. Bevan), was giving his moral support to the unofficial strikers?

Mr. Robens: All my negotiations with all parties concerned have not been inconvenienced in any way by any statement anybody has made.

Mr. Aneurin Bevan: This is the first time that I have heard that any statement by me has appeared anywhere; nor has any statement been made by me. The hon. Gentleman did not give me notice of what he intended to say and I consider it extremely discourteous of him not to have done so. I have made no statement whatever concerning the strike.

Hon. Members: Withdraw.

Mr. Thorneycroft: The right hon. Gentleman is quite accurate. I did not give him notice. I saw no reason why I should. I have been asked to withdraw. If the statement was inaccurate or wrong,


then, of course, I would withdraw it unreservedly. But this statement did appear, and it was a most serious statement. It would seem to me most extraordinary that such a statement was not contradicted either by the Government or by the right hon. Gentleman.

Mr. Bevan: I say that I have not seen the statement. This is the first time I have heard about it. It is not the first time the British Press has lied about me.

CENTRAL AFRICA (CLOSER ASSOCIATION)

The Secretary of State for the Colonies (Mr. James Griffiths): With your permission, Mr. Speaker, and that of the House, I should like to make a statement. I apologise for its length.
The need for bringing about a closer association between Southern Rhodesia, Northern Rhodesia and Nyasaland has been discussed for many years; but the problem has hitherto proved difficult of solution. In 1945 there was established, in the Central African Council, machinery designed to promote contact and co-ordination of policy between the Governments of the three Territories in matters of common interest to them. The Council is purely advisory and the arrangement has proved inadequate to its purpose. There is an increasing need for some form of closer association between the three territories in the interests of their economic development, and of the prosperity and well-being of their inhabitants.
As I announced in my statement of 8th November, 1950, it was agreed between His Majesty's Government in the United Kingdom and the three Central African Governments, that senior officials from all four Governments should meet together to undertake a fresh examination of the problem in all its aspects, and to see whether it was possible to formulate proposals which they could recommend to their respective Governments. I made it clear that adequate opportunity would be afforded for public discussion of any proposals that might be put forward, and that full account would be taken of African opinion in Northern Rhodesia and Nyasaland before any change

affecting African interests could be considered.
The officials met accordingly in conference during March, 1951. Their Report, which is published today as Cmd. 8233, and which is being simultaneously issued by the other Governments concerned, is unanimous on all points. Its main recommendation is that closer association between the three Territories ought to be brought about and that the need for this is urgent.
It recommends further that this should be done not by amalgamation of the Territories, but on a federal basis; and puts forward in some detail a scheme framed to take account of the special features of the Central African situation, including the self-governing status of Southern Rhodesia, and designed in particular to provide substantial safeguards for the interests of Africans.
Moreover, those matters most closely affecting the life of Africans would, under the proposals in the Report, come within the territorial and not within the federal sphere; and within the territorial sphere the Northern Rhodesia and Nyasaland Governments would remain responsible as at present, to His Majesty's Government in the United Kingdom.
Simultaneously with the Report there are also being published an up-to-date comparative survey of native policy in the three Central African territories (Cmd. 8235) and a geographical, historical and economic survey (Cmd. 8234).
Neither His Majesty's Government in the United Kingdom nor the other Governments concerned are at this stage committing themselves to acceptance of any of the particular proposals in the Report, which is published as a basis for consideration and discussion. His Majesty's Government in the United Kingdom, however, wish to say now that the proposals appear to them to embody a constructive approach to the problem which deserves the careful consideration of all the peoples and Governments concerned.
When there has been time for this consideration, I hope to visit the Central African Territories with my right hon. Friend the Secretary of State for Commonwealth Relations. In Northern Rhodesia and Nyasaland I should of


course discuss the matter fully with representatives of the European and African inhabitants and other communities. The Government of Southern Rhodesia would by that time have received indications of the attitude of the inhabitants of that territory and this information would be available for the purpose of discussions which my right hon. Friend would have with Southern Rhodesian Ministers.
Finally, in the light of these discussions, we should both attend a conference with Southern Rhodesian Ministers and representatives of the Governments and European and African communities of the two northern Territories. These deliberations would be of material help to the several Governments and Legislatures concerned, before whom the matter would in due course come for consideration.
In issuing this Report for public consideration and discussion I wish on behalf of His Majesty's Government in the United Kingdom to make it clear that, in relation to our responsibilities in Central Africa, we adhere fully to the policy which has been repeatedly stated with the assent of all parties. Our ultimate objective is self-government within the Commonwealth, but self-government must include proper provision for both Europeans and Africans.
We have set Africans on the path of political, social and economic progress and it is our task to help them forward in that development so that they may take their full part with the rest of the community in the political and economic life of the territories. The Report records the strong and unanimous belief of all members of the Conference that economic and political partnership between Europeans and Africans is the only policy which can succeed in the conditions of Central Africa. His Majesty's Government in the United Kingdom have been glad to note that the Conference have given expression to this very important principle as forming the basis for their proposals.

Mr. Lennox-Boyd: I think the whole House would agree that the right hon. Gentleman has made a statement today which may well have historic consequences. While obviously neither the Government nor the Opposition can commit themselves at this stage to the details of the proposals which have been made, I think we all alike agree that the recommendations

are unanimous, which is an altogether remarkable and significant fact.
We welcome the view expressed by the Government, with which we agree, that this represents a constructive approach. The only question I should like to ask is whether the use of the words "constructive approach" means that we can assume that, given the understanding and support of the people in the Territories concerned, His Majesty's Government in the United Kingdom will be glad to see action taken in accordance with the principles recommended in this Report?

Mr. Griffiths: When I made the statement last November, that we proposed to set up this Conference of officials, and that we should submit their Report, I made it clear then—and I stand by that pledge now—that before His Majesty's Government come to consider and decide on this matter, we must have full consultation with all those who are concerned. What I have said is that we are publishing the Report today. We ask everyone to consider it on its merits, and before any decisions are taken I propose, with my colleagues, to consult the people in the Territories.

Mr. Lennox-Boyd: I do not want to press the right hon. Gentleman unduly, but I asked whether, given the understanding and support of the people in the Territories, we could take it that His Majesty's Government would like to see action taken on these lines?

Mr. Griffiths: I think I had better leave it where it is. I have carried out fully the pledge I gave last November.

Mr. Aneurin Bevan: Is the right hon. Gentleman aware that public opinion in this country is at present extremely sensitive on all matters relating to racial discrimination in South Africa? Will he give an assurance that, before the Government's policy is intimated to any of the parties concerned, an opportunity will be given in the House to have a full debate?

Mr. Griffiths: The question whether the House will or will not debate it is, as my right hon. Friend knows, a matter for the Leader of the House. All I would say is that if a debate takes place, I can see that there may be advantages in it, but I should like to point out that we propose in the not-too-distant future—we


think in September—to visit the Territories. We have given an indication that before His Majesty's Government make decisions there shall be consultation. If a debate is held, I hope that it will be on the understanding that we shall not be able to announce the policy of His Majesty's Government on the matter.

Mr. Clement Davies: I think the right hon. Gentleman has made it quite clear, but so that it may be beyond all doubt, may I ask whether it is not the position that the Government are not making any decision today whatever, and are reserving the matter until an opportunity has been given to the right hon. Gentleman and his colleague to go out to Africa and consult, on the spot? Then, does it merely amount to this, that the statement made by the right hon. Gentleman is merely an introduction to the document which has been published today?

Mr. Griffiths: The document which is being published today is one on which we have expressed the view that it is a constructive approach to the problem, and one worthy of the consideration of everybody. The Government are not committed to any of the proposals.

Mr. Eden: With respect, is it not rather more than that? Is it not really a very remarkable and a very encouraging thing that there should have been this measure of agreement in the matter in this way? While the House must, of course, reserve its right, we must also be careful not to suggest that nothing at all has happened, as otherwise we may lose the gain that we have made.

Mr. Griffiths: I used the words of the Report that it was a constructive approach because I think it is significant that the Report is a unanimous Report of all the officials.

Mr. John Hynd: May I reinforce what has been said by my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) and tell the Minister that a tremendous development of this kind should not be entered into without the House having a full opportunity of debate? With regard to consulting African opinion, my right hon. Friend is aware, I think, that there is widespread misapprehension among the Africans in these Territories, however ill-founded, about this development, and

when my right hon. Friend says that African opinion has been consulted, will he assure us that not only official representatives on the Legislative Councils and the chiefs have been consulted, but that the popular African organisations, such as the Nyasaland African Congress, have been consulted and will be consulted in these matters? Will he also bear in mind that there will be considerable misgivings at the fact that the Africans in Nyasaland are not represented at all?

Mr. Speaker: The hon. Gentleman is debating the document at length. Surely, we might read it first and see what is in it, and then debate it later.

Mr. Griffiths: I did not say that we had consulted African opinion. What I said was that we propose before considering the Report in detail to consult African opinion, and, of course, I shall be very glad of the privilege and opportunity of meeting all African representatives and individual Africans for that purpose.

Sir Ian Fraser: In view of the supreme importance of friendly understanding in the Commonwealth, can the right hon. Gentleman give an assurance that discussions will take place between His Majesty's Government and the Government of the Union of South Africa?

Hon. Members: No.

Mr. Griffiths: I think that the discussions which will take place in regard to the statement I have made today will be with the Governments of Southern Rhodesia, Nyasaland and Northern Rhodesia, and with no other Governments.

Earl Winterton: As one who has for many years represented the opinions of the white settlers in Northern Rhodesia, may I ask the right hon. Gentleman whether he is aware that we have always been in favour of the fullest consultation, and that, therefore, we are in complete agreement with what he said. So far as I know, no one in Northern Rhodesia wants consultation with the Union on this matter.

Mr. Driberg: Whatever decision His Majesty's Government eventually arrive at, will my right hon. Friend take particularly painstaking care about this matter of consulting African opinion, bearing in


mind that it may obviously not be altogether easy, in the local circumstances, for him to arrive at what that opinion really is?

Mr. Griffiths: I certainly will. I have just returned from Kenya and Uganda, and I think that if my hon. Friend will make inquiries he will find that I took special pains to consult African opinion in the fullest possible way, and I will do so similarly in this case.

BUSINESS OF THE HOUSE

Mr. Churchill: May I ask the Leader of the House whether he has any statement to make in regard to any alteration of business?

The Secretary of State for the Home Department (Mr. Ede): The Committee stage of the Finance Bill will be continued tomorrow, Thursday, and the Forestry Bill [Lords] and other business announced for consideration on that day will be postponed.

Mr. Churchill: Could the right hon. Gentleman indicate whether he hopes to begin tomorrow with the new Clauses?

Mr. Ede: May I say that hope springs eternal, and it will all depend upon the progress we make today whether that desirable consummation can be attained. I do not myself put it outside the bounds of possibility, but the possibility of achieving it does not rest with this side of the House.

Mr. Churchill: Of course, it would be very nice to begin the new Clauses tomorrow, but I presume the Leader of the House quite realises that they will require two or more days next week, with the Schedules, in order to complete the Bill?

Mr. Ede: There, again, the right hon. Gentleman said in Committee early one day this week that there can be no bargain on this kind of thing, and both he and I, I know, if there were a bargain, would feel compelled to keep it personally no matter what inconveniences that might land us in with other people. I think we had better see how we get on today, and then we could start on the new Clauses tomorrow. I certainly would not expect, with 92 new Clauses on the Paper—I do not know how many will be selected—to get all those during one

ordinary sitting day. Therefore, when we see how far we get today and tomorrow, I think we can then consider what extra time, if any, will be required to finish the Bill.

Lieut.-Commander Gurney Braithwaite: Will the right hon. Gentleman do his best, in what are admittedly difficult circumstances, to safeguard the Question hour which is of such importance to Private Members on both sides, and also see what he can do in his capicity as Leader of the House to ensure that important Adjournments debates, such as that mentioned by Mr. Speaker this afternoon in connection with the lady at Stevenage, can be reached at an hour of the night at which the House can debate them properly?

Mr. Ede: That cannot be promised by any one Member of the House, no matter what position he holds. I have noticed on two or three occasions during the Committee stage of the Finance Bill that when everybody seems to be contented, the hon. and gallant Member for Bristol, North-West (Lieut.-Commander Braithwaite) seems to think it necessary to make a few more or less humorous remarks.

Mr. Bellenger: Can my right hon. Friend at this stage inform the House, for the convenience of hon. Members, whether he anticipates that our discussions are likely to go on into the early hours of tomorrow morning?

Mr. Ede: No, Sir, I would prefer to say nothing on that subject at this stage because I have hopes—I do not put it any higher than that—but I think the House knows my views about adjourning in the small hours.

Mr. Aneurin Bevan: Is the right hon. Gentleman aware that we are not anxious to express any view as to the reasons that lead to all-night Sittings of the protracted kind we have had recently and which are accompanied by scenes outside the Chamber not entirely consistent with the dignity of the House? May I ask whether the two Front Benches, if we are to have a repetition of this situation, will not get together for the purpose of discussing physical conveniences for Members who are being kept in this uncivilised way for very many hours? Will he consider particularly, in the interests of the older hon. Members of the House, whether some part


of the physical conveniences immobilised by another place can be thrown open for the convenience of this House? Does he appreciate that in these days all-night Sittings have not the same kind of impact upon hon. Members as they used to have, because there are more hon. Members now who have not domestic conveniences so near the House as hon. Members used to have? If we are to have a repetition of this behaviour, will my right hon. Friend, in the interests of the good health and decency of the House of Commons, consider the provision of proper physical conveniences?

Mr. Ede: I agree with my right hon. Friend that this House was obviously not designed to deal with the kind of situation that arises from time to time in modern days when prolonged Sittings take place. I will consult with the various authorities responsible—they are more than one—to see whether something better can be arranged.

Mr. Churchill: May I assure the right hon. Gentleman that we fully agree with what he has said about the importance of having the right hon. Member for—is it?—Ebbw Vale (Mr. Bevan) properly feather-bedded while he is so magnanimously keeping the Prime Minister in office.

Mr. Bevan: Will the right hon. Gentleman the Member for, I think, Woodford (Mr. Churchill), consult his own colleagues, for he will then realise that more Members of his own party complained to me than Members of our party?

Mr. Ede: As these questions continue, the earlier hopes that I had mentioned begin to grow dimmer.

MINISTERS' ANSWERS AND STATEMENTS (SUPPLEMENTARY QUESTIONS)

Major Guy Lloyd: May I ask you a question, Mr. Speaker, of the gist of which I have given you private notice? I wish to ask if you are in a position to answer

a question which I raised some time ago as to whether or not it is right and proper for a right hon. or hon. Member to stop discussion on a major issue raised on a Ministerial statement by going through the words, "I beg to give notice that I will raise the matter on the Adjournment"? You will recollect, Mr. Speaker, that you said you would consider the question. I respectively ask if you have considered it and will now give us your advice and Ruling.

Mr. Speaker: The hon. and gallant Member asks me to give a fresh Ruling on the subject of Members putting a stop to supplementary questions by giving notice to raise the matter on the Adjournment. This was the subject raised on 27th February.
On 1st March I received from a Member a strong protest against limiting the power of giving such notice to the Member who asked the original Question. In reply to him, I wrote that I did not propose to give a further Ruling on the subject unless I received representations showing that the House agreed to a change in the existing practice.
The practice is the same whether the questions are supplementary to a Question or to a Ministerial statement, but it would always be in my power to stop any attempt to abuse this blocking procedure by too premature notice of intention to raise the matter.

BILL PRESENTED

RURAL WATER SUPPLIES AND SEWERAGE BILL

"to increase to £45 million the limit of £15 million on the contributions out of moneys provided by Parliament which may be made under Section 1 of the Rural Water Supplies and Sewerage Act, 1944," presented by Mr. Dalton; supported by the Chancellor of the Exchequer, Mr. T. Williams and Mr. Lindgren; read the First time; to be read a Second time Tomorrow, and to be printed. [Bill 120.]

Orders of the Day — FINANCE BILL

Considered in Committee. [Progress, 12th June.]

[Major MILNER in the Chair]

Clause 32.—(RESTRICTION OF CERTAIN TRANSACTIONS LEADING TO AVOID ANCE OF INCOME TAX OR PROFITS TAX.)

4.25 p.m.

Mr. Maudling: I beg to move, in page 24, line 10, after "any," to insert "non-resident."
It would probably be for the convenience of the Committee if we also considered the following consequential Amendment in line 11, after the first "any," to insert "such."
The purpose of Clause 32 is to prevent the avoidance of Profits Tax by companies transferring their business or part of their business overseas. As I understand, the whole purpose of the Clause is concerned with transferring businesses or part of businesses to an overseas territory where they will no longer be subject to the British Profits Tax. Shareholders remaining in the United Kingdom will be liable as individuals to Income Tax, but if control of management passes overseas the company will no longer be subject to the Profits Tax.
Therefore, the Clause as a whole is aimed against transfer from this country to countries abroad. This is confirmed by subsection (1, a, b, c), particularly paragraphs (a) and (b), which refer to the movement of a company overseas or the transfer of part of the business of a company to an overseas territory. However, when we come to paragraph (d) as drafted there is a substantial difference.
The purpose of paragraph (b) is to prevent, without the permission of the Treasury, any company which controls another company overseas from transferring its shareholding or part of its shareholding in that overseas company to any other person, with the sole exception of transfers made necessary by the appointment of someone as a director. Leaving aside the question of the appointment of a director, which, in any case, is only a minor point, the Clause makes it necessary to obtain Treasury consent before any company in this country can

sell any part whatever of its holding in a company which it controls overseas.
I cannot believe that for the purposes of the Clause as a whole it is necessary to go as wide as that, and that is why I move my Amendment which makes it clear that the paragraph is merely intended to prevent the sale of shares in those circumstances to non-resident persons. The Committee will see clearly that it would defeat the main purpose of the Clause if it were possible for a United Kingdom company to sell its shareholding in an overseas subsidiary to someone resident abroad, for thereby control of the company would be transferred abroad, but if I were to sell to the Attorney-General my shareholding in a company which I controlled overseas the control of that company would still remain in this country.
By the transfer of the shareholding between two United Kingdom residents there would have been no transfer of control of management overseas and, therefore, no avoidance of Profits Tax. I feel mat it must have been the intention of the Government solely to prevent the transfer of such shareholdings in those circumstances to non-resident persons. If that is so, my Amendment will clarify the Clause.
4.30 p.m.
If, on the other hand, it is the intention of the Government literally to stand by the wording of the Clause and to prevent any transfer of shares in those circumstances, an extraordinary situation would arise. The effect would be that if company A in this country controls company B in Australia the holding company would be unable, without Treasury permission, to transfer any of its shares to anyone at home or abroad. Those shares, therefore, would become unmarketable in any circumstances without Treasury consent.
This is an extraordinarily wide prohibition to apply to companies, and I should have thought one which was unjustifiable even on the need made out so far by the right hon. and learned Gentleman to pre-cent the avoidance of Profits Tax. In passing, if this Clause should be carried and the Government make such shares wholly unmarketable without Treasury consent, I hope they will take that matter into account when valuing such shares for probate purposes because the value of such shares would be much lower.
I have moved this Amendment in the hope that its effect will be to clarify the purpose of the Government to prevent the transfer of control of a company from this country to abroad. If, however, the Government intend the Clause to be read as it stands, if they intend to prevent the transfer of any shares in such circumstances to anyone, whether abroad or resident in this country, they will have the greatest difficulty in justifying such restraint, which will be very vexing to all British businesses.

Mr. Arthur Colegate: I wish to support this Amendment because it relates to one of the vital transactions which we have been discussing on previous Amendments and on which we had a promise of favourable consideration from the Chancellor of the Exchequer. The type of transaction I have in mind is the transfer within the United Kingdom of shares from one company to another for purely commercial and business reasons.
For instance, if two companies agree to co-operate with each other in an overseas territory, it is a great convenience to allow the second company in the United Kingdom to purchase part of the shares which the first company owns in the overseas company. I have taken part in such transactions as no doubt have other hon. Members and there is no question of evasion of tax. If the words "non-resident" are inserted in the Clause there will be no loss of the object for which this Clause is designed and, at the same time, it would materially assist the people concerned with this type of transaction.

Lieut.-Commander Gurney Braithwaite: May I preface my remarks by expressing what I am sure are the hopes of all of us that the learned Attorney-General has had a refreshing sleep since we parted? I note with great satisfaction that he has regained that fresh complexion which we all admire, presumably without recourse to devices with which the fairer sex sometimes fortify themselves. [HON. MEMBERS: "Order."] I think there is nothing disorderly about that remark, Major Milner; it is merely a statement of fact.
When the Chancellor was replying to the rather wide discussion we had on the first two Amendments to Clause 32, he indicated quite clearly that he realised

there were flaws in this Clause and that it might be improved as a result of discussion in Committee. My hon. Friend the Member for Barnet (Mr. Maudling) has now moved an Amendment which does much to that end.
The Government must realise that my hon. Friend has put his finger on a weakness in the machine here proposed to deal with that tax evasion with which none of us have any sympathy, and which my hon. Friend the Member for Burton (Mr. Colegate) has reinforced. I hope that the more gentle atmosphere in which we meet this afternoon will be reflected on the opposite side of the Committee and that the right hon. and learned Gentleman, refreshed as he is, will now leap to his feet and announce to us that he will accept the Amendment.

Sir Peter Macdonald: I hope that the right hon. and learned Gentleman will seriously consider and accept this Amendment because, as the Clause stands, I see in it a great deterrent to colonial development in spite of the assurance given by the Chancellor yesterday. Recently we have had in the House an interesting debate on the Colonial Development Act and its administration.
It was generally agreed that the best prospects of colonial development succeeding would be provided if, in the overseas countries concerned, companies were to have local representatives on their boards. Everybody also agreed that it was essential in the interests of colonial development for private capital to be encouraged to invest in the Colonial Empire. It was realised that the £100 million voted under the Act could not possibly meet the needs of the Colonial Empire and that, therefore, private capital must be provided.
The point of this Amendment is a good one. For instance if a parent company in this country has a subsidiary company in one of the Colonies or, as is often the case, in several and they want to add local talent to the board—which is essential in order to have local know-how—and if the parent company wishes to transfer shares to the new directors or to the subsidiary companies for issue to them, they are precluded from doing so, without the permission of the Treasury, by this Clause.
It is all very well to say that permission would be given willingly, but that is not the way for the Committee to legislate. People who are trying to carry on difficult businesses and to develop the Colonial Empire should not have to go cap in hand to the Treasury or to the Colonial Office or to the Bank of England every time they want to make any change in their boards or issue shares to their local representatives. We should not legislate for that.
Therefore, I hope that, when the right hon. and learned Gentleman replies to his appeal, he will go further and tell us what other alterations, after consideration, he intends to make in this Clause, because, being incapable of amendment as it now stands, it is the view of some of us that it should be withdrawn altogether. It is impossible to amend it satisfactorily. The Clause should be withdrawn, and, if necessary, a new Clause brought forward on Report stage. I appealed sincerely to the right hon. and learned Gentleman either to accept this Amendment or to withdraw the Clause altogether, and, if he thinks it is necessary, to introduce a new Clause.

The Attorney-General (Sir Frank Soskice): There would, I think, be difficulty about accepting the Amendment, for the following reasons. It would make it possible for a United Kingdom company to transfer shares in an overseas company which it controls, not only to a foreign company—a non-United Kingdom company—or person, but also to a United Kingdom company or person. That would be the effect of the Amendment. If it were possible to do that, it would be possible, by so doing, to escape the obligation to pay Profits Tax. A United Kingdom company controlling a company overseas could transfer some of its shares, not to another United Kingdom company, but to another United Kingdom individual.
Let us suppose that they transferred shares in a company which they controlled overseas to another United Kingdom company, and that that other United Kingdom company pays back the dividends which it gets from the overseas company to the United Kingdom company. Then, of course, the dividends would have to pay Profits Tax in the hands of the other United Kingdom company, because, of course, the dividend would not be franked investment income. That would go to

the other United Kingdom company from the overseas company and would not have borne United Kingdom taxation.
Let us suppose that the parent company forms a subsidiary in the United Kingdom and transfers to that subsidiary, which it forms here, shares which it owns in the subsidiary company which it controls abroad. Then, the United Kingdom subsidiary company pays back to the parent company in England, in the form of dividends, the dividends which it draws on the shares transferred to it in the overseas subsidiary. I hope I have made that reasonably clear. The payments by the United Kingdom subsidiary company to the United Kingdom parent company would pay Profits Tax, because it is not franked investment income.
The objection which I have to the Amendment is that, supposing that the United Kingdom parent company does not form another subsidiary company in England, but transfers not to another English company, but to an individual in England—say, a member of its board or anybody you like—supposing it transfers to that person some of the shares which it owns in the overseas subsidiary, in as much as Profits Tax is not payable by individuals, but only by companies, no Profits Tax would be payable by the individual. He would have to pay Income Tax, of course, because it would be part of his income, but he would not pay Profits Tax, because he simply holds the shares as trustee for the English company. In fact, the shares would be held by him as nominee or trustee for the English company, and, although they would be liable to Income Tax, they would not be liable to Surtax. Therefore, they would escape the liability to Profits Tax by that device.

Several Hon. Members: Several Hon. Members rose—

The Attorney-General: I would certainly give way to one or two hon. Members, but I think it would be more convenient if I repeat later what I have said, and then, perhaps, if hon. Members have not followed me, I might explain their difficulties.
That is my main objection to accepting the Amendment. Now, to take the case which the hon. Member—

Mr. Colegate: May I ask the right hon. and learned Gentleman a question?


Surely, he has already taken powers under the Bill to deal with what he has described as a device for escaping the Profits Tax. Surely, he has those powers under Clause 28.

4.45 p.m.

The Attorney-General: It might or might not be such a case. To some extent, maybe, they might overlap, and some transactions might fall under both, but that is not a reason for limiting this Clause in such a way as to make it possible to do what, quite obviously, would lead to evasion.
May I now come to the point raised by the hon. Member for Burton (Mr. Colegate). He was concerned with the case in which we have a United Kingdom company which has an overseas subsidiary, either wholly or partly owned, and which wants to associate another United Kingdom company in that overseas subsidiary for some purpose or for some commercial reason. I feel that the Clause as drafted would prevent that, but I am able to give the assurance that Treasury consent in that kind of case would readily be forthcoming.
The general nature of the Clause is such that it depends very much on Treasury consent, and I am able to say that, in a case like that, where an English company wants to join in with another English company in the ownership of an overseas subsidiary—

Sir P. Macdonald: Why not put it in the Bill?

The Attorney-General: I am not prepared to put it in the Bill, but I assure the Committee that, in that kind of case, consent would be readily forthcoming.
To deal with the particular point raised by the hon. Member for the Isle of Wight (Sir P. Macdonald), as I understood it, he was anxious lest the Clause would prevent a parent company here, which wanted to strengthen the board of an overseas subsidiary which it owned, from transferring shares to an individual in the overseas subsidiary, with a view to qualifying him to act as a member of the board. If that is what he has in mind, that case would be covered by the opening words of subsection (1, d):
except for the purpose of enabling a person to be qualified to act as a director.

Sir P. Macdonald: It may be that he may be given one share, or that he may secure a holding before going on the board.

The Attorney-General: Perhaps I misunderstood the right hon. Gentleman. I think his difficulty was in regard to qualifying the individual to act as a director, but he would not require consent for that. If he seeks to give someone interested in the company power to put someone on the board, consent would be requisite for that, because the opening words of the subsection would not cover it. There, again, I say that, in a case like that, I have no doubt—although I cannot give an undertaking in that regard, because the question would depend upon the facts—ordinarily, that would be the sort of case in which consent would be given, but I cannot give an undertaking such as I have given in the other regard.

Sir P. Macdonald: But a company concerned would have to go through the colonial governor to the Finance Minister, who, in turn, would have to go to the Colonial Office, who, in turn, would have to go to the Treasury, who, no doubt, in turn, would have to go to the Bank of England. Months and perhaps years would be wasted in doing a perfectly innocent transaction, transferring a few shares of an individual in the company without any fraudulent intent whatever. Why should that burden be put on the company when we are trying to develop the Empire as it should be developed?

The Attorney-General: No such difficulty need arise. Treasury consent would have to be asked here by the United Kingdom company. It would ask consent to transfer shares to the person who wants to go on the board of the subsidiary. As my right hon. Friend said yesterday, in a simple case it would be given by the Treasury without further ado.

Sir P. Macdonald: The company may be registered in the Colony concerned, as many now are, and in that case they would have to go to their own Treasury.

Mr. Bell: Would the right hon. and learned Gentleman clear up a point of law? Does he say that if shares are transferred to a person to hold in trust for a company the dividends upon


those shares, when they reach the company beneficially entitled to them, would not be subject to Profits Tax?

The Attorney-General: When it reached the parent company, it would be liable to the lower rate of 10 per cent. as part of its profits, but not liable to the higher rate because it would not be distributed by the United Kingdom company.

Mr. Bell: I think that perhaps the right hon. and learned Gentleman did not understand me. When it reached the company would it not be in exactly the same position as any other income of the company, subject to 10 per cent. for retained and 50 per cent. for distributed profits?

The Attorney-General: I am not sure to which company the hon. Member is referring. If he means when it reaches the parent English company, then it certainly would form part of its income, and if the British company here distributed that it would then be subject to the higher tax, but otherwise it would not be subject to the higher distribution rate when it was distributed unless by a United Kingdom subsidiary to the parent company. That is where the Profits Tax would be lost.

Mr. David Eccles: I am in slight confusion about the meaning of the Clause, both by speeches from this side of the Committee and from the Attorney-General. It refers to the transfer of shares and debentures to any person and, in passing, does that include transfer to a company?

The Attorney-General: The Attorney-General indicated assent.

Mr. Eccles: It does. The Clause is very serious.
May I make a remark on the case of transfer of shares to a person resident in this country? The Attorney-General will know that in these days, particularly when rates of tax are very high, it is rather difficult to find ways to reward engineers and mine managers and people of that sort who undertake long and, it may be, very unpleasant operations—three years in the jungle, or something of that kind—in opening up a new property. It is a very common practice and one which I should think the Government would recognise as reasonable, to offer to these

people some shares in the company if the result of their work is that the company expands and the mine, or oilfield, is developed.
There seems nothing wrong in that at all. That is the common way in which one can associate one's manager in the developing business and give him, as it were, an option. If the thing goes well, he can share in the success of the business. As the Clause is drafted, I think Treasury permission would have to be obtained for the transfer, whether at the option of the man or not I do not know, of any little amount of shares to any manager overseas—perhaps living in Venezuela or elsewhere under difficult conditions.
It is absurd that what is a common way of stimulating our young men to go abroad and open up these places, a common way of rewarding them and giving them a feeling that if what they are doing goes well they will get something out of it should need consent. I think it ridiculous that if I offer a mine manager one thousand shares standing at £1 that I have to go to the Treasury to get consent. This will interfere with one of the long-established methods by which we have opened up undeveloped countries. I hope the Government will take that into consideration.
As I understand that "person" also refers to a company, the thing becomes even more absurd because one of the most successful developments in British company structure is generally known as the group system for developing overseas resources. In the United Kingdom we have powerful finance houses which have in their service a group of first-class technicians on the mining and the metallurgical side, geologists, scientists, doctors and the rest. They lend or hire those technicians to a whole group of small mines, or developing oilfields.
There is more than one of these houses and very often the risk involved in opening up a property is so great that it is beyond the capacity of one of the finance houses. It is an old-established practice for them to share out between each other the risks of opening up such a field. Under the Clause as it stands, if I take actual companies, it would appear that the Union Corporation, for example, when developing the Orange Free State, would be debarred from asking the Central Mining Investment Corporation to


come in with it in any way without going to the Treasury.

Dr. Morgan: Dr. Morgan (Warrington) indicated dissent.

Mr. Eccles: The hon. Member shakes his head, but I ask him to read the Clause.
One could not transfer shares in an Orange Free State mine, which is a subsidiary, to any other company in the United Kingdom, without going to the Treasury and asking permission. That cuts across a long-established and most successful practice in developing overseas resources. I think the Government cannot have examined the effect of this sort of thing on our business structure.
What will happen if this goes through? As it has been mentioned in the papers, I think I could refer to the Chester Beattie Group, which may now go abroad. They may follow the Anglo-American Group companies abroad and will say, "It is no good keeping Roan Antelope and other companies in London. Because of this we shall migrate," to the very great detriment of London and the Revenue. I do hope we shall have a different view on this Amendment.

Mr. I. J. Pitman: I think the Attorney-General will agree that the purpose of this Clause is to prevent subsidiary companies marketing their shares and transferring them in any way and that the purpose of this Amendment is to release from that general embargo sales of shares in subsidiary companies within the United Kingdom. I think that is a correct statement of what the Amendment seeks to do. The Attorney-General is resisting the Amendment on the grounds that there might be a nominee holder of the shares of that subsidiary company. That was the whole point of his objection, a personal nominee in place of a corporate nominee.
I would point out that even if that happens the personal nominee is still only a nominee and the parent company is still the beneficial owner of those shares. As I understand the law, where I am a personal nominee for a company and the beneficial ownership remains with the company for whom I am the nominee, it is the company who return that income as their income. That was the point made by my hon. Friend. That income

is subject to Profits Tax; there is no escape from or diminution of Profits Tax or any taxation resulting from that transfer to a nominee.
5.0 p.m.
If that is not so, I still say that, supposing I was appointed a nominee—my hon. Friend made the point and I think it is absolutely true—that is probably a series of transactions under Clause 28. The first transaction is the transfer of the shares to me in my personal capacity. The second is when, either by the back door, without telling anybody, or by suffering a diminution of salary or something else, I transfer the real dividend from that subsidiary to the parent company. That is clearly either a transaction or a series of transactions which comes under the mischief of Clause 28. So I would say that the whole basis of the objection by which the Attorney-General has rejected the Amendment of my hon. Friend the Member for Barnet (Mr. Maudling) is cut away.
I should like to make the further point that the whole system of investment is based on the supposition that at some time one is free to turn that investment back again into cash. If we, as a nation, were to depart from this time-honoured basis of investment so that once a person had invested he would not be able to get his money back by selling that investment, even for however small an amount if that should have become its value we should get into the state of affairs of Stevenson's "Bottle Imp."
To pass in this House a law that in no circumstances can such subsidiary shares be sold puts a complete stopper on the creation of shares in subsidiary companies overseas. I agree, therefore, that as has been said by my hon. Friend the Member for Chippenham (Mr. Eccles), this Clause will not only stop the creation of subsidiary companies and their transfer to people overseas—I think that is bad, but we shall be dealing with that aspect on the Motion, "That the Clause stand part of the Bill"—but it is also definitely bad in the limited field with which this Amendment deals, which is limiting the transfer of shares in subsidiary companies amongst British residents here.

Sir John Mellor: I cannot see how this proposal, as explained by the Attorney-General, works out, because if the income is received by a


subsidiary company resident in this country it will have paid Profits Tax in the hands of the subsidiary company, as I understand it, and will be passed on as franked investment income to the parent company. If, on the other hand, it is received by a person nominated to receive it as a trustee, who then passes it on, it will pay Profits Tax in the hands of the parent company. So, in either circumstances, in so far as it is ultimately distributed, it will pay Profits Tax at the distributed rate and in so far as it is not distributed it will pay at the lower rate.
Regarding the system as a whole, including parent company and subsidiary or parent company and an individual trustee, Profits Tax will, in the ultimate result, be paid according to the amount distributed and will be exactly the same whether it comes through the hands of the subsidiary company resident in this country or through a person nominated to receive the income as a trustee. I hope that after the discussion which has been taking place the Attorney-General will be in a position to enlighten us on that point.

Viscount Hinchingbrooke: I hope that the Attorney-General will again look at the possibility of applying Clause 28 to the situation which seemed to be uppermost in his mind when he rejected this Amendment. As I understand the Amendment, it is important but somewhat narrow in scope. It relates only to a transfer of shares within the United Kingdom.
The Attorney-General seemed to agree with the idea that Profits Tax would be recovered through any subsidiary. He was concerned only with the position which would arise if a United Kingdom company distributed shares to someone because he said that that person was not called upon to pay Profits Tax but only Income Tax and Surtax, and the Treasury would, therefore, lose that amount of Profits Tax. It was only because he thought that that would be lost that he rejected the Amendment.
If the right hon. and learned Gentleman will say, in reply to this debate, that he thinks there is something applying Clause 28 to that individual—albeit we hate Clause 28—and that that person would be caught, I cannot see why he should object to this Amendment. If he accepts the Amendment it will become

possible for shares to be distributed in the United Kingdom between companies and between individuals without the sanction of the Treasury, which wastes a great deal of time.

Mr. Higgs: Every Amendment we reach on this Clause supports the argument I made to the Committee yesterday that the Government have gone entirely the wrong way about the problem which this Clause is intended to tackle. I believe that if the Government decided anew to prohibit the crime of murder they would come to the House and say that it was illegal and a capital offence to do anything at all, and then expect the Opposition to provide them with a series of Amendments specifying a list of acts which were not capital offences. That is the sort of position we are getting in connection with this Clause.
To get at one type of transaction—I believe the number is limited—which might possibly take place with a view to avoiding taxation, the Government prohibit a whole list of perfectly innocent transactions, and then when we come along and tell them of the difficulties they begin for the first time to see the difficulties of their Clause. The subsection which we are now seeking to amend would, so far as I can see, prohibit, without reference to the Treasury, any sale to any body or any company of any shares in an overseas concern which are held by a company in this country.
Have the Government really taken action to find out what sort of volume of dealings that applies to, and how many of these transactions there are each day on the Stock Exchange, how many companies here distribute shares in overseas concerns to people and what sort of machinery is to be set up to investigate the desirability or otherwise of all these transactions? If anyone instructs his broker to go into the Stock Exchange and buy for him shares in some overseas concern, what sort of process has to be gone through, what sort of disorganisation of Stock Exchange business will this provision cause?
Here, again, we have a Clause which, in order to eliminate one undesirable transaction, prohibits hundreds of perfectly innocent ones. To prevent it prohibiting these perfectly innocent ones we have to set up machinery which is costly, a nuisance to everybody, and is so much red tape. It would have been very much


easier, in the long run, if a little more attention had been paid to defining in a proper and narrow way the evil which this is designed to remedy, in which case the right hon. and learned Gentleman would have received nothing but support from this side of the Committee.

Mr. Bell: I cannot help feeling that the Attorney-General is himself not very happy about the provisions of this Clause. As my hon. Friend has pointed out, this subsection would affect a number of entirely legitimate transactions which might not, in any case, take the form of a transfer of a slab of shares. Such a transaction might take the form of a simple and ordinary transaction on the London Stock Exchange.
If the right hon. and learned Gentleman will look at the Clause, he will see that it applies, not merely to the parent company parting with control to a subsidiary company, but to any sale of shares owned by the parent company in the subsidiary. Take, for example, the case of a parent company which owns 90 per cent. of the shares in a foreign subsidiary. If it sells 10 or 20 per cent., the control of the subsidiary remains in the parent company. That would be an ordinary transaction which might have the object of raising ready money for some other activity of the company.
This is a far-reaching and very significant restriction upon the ordinary transfer of shares inside the United Kingdom by people or legal entities who are British subjects. That is something which should not be embarked upon unless it has to be, and if it has to be, it must be embarked upon subject to every restriction which can be imposed without defeating the main object of the Clause. I would ask the Attorney-General to consider whether the restriction proposed by my hon. Friend is not one he can accept. The principal objection which the right hon. and learned Gentleman raised against it was the one of the individual to whom shares were transferred who might be a nominee of the parent company in the United Kingdom. I hope that, as a result of the consultation which he has had, he has now reached the conclusion that that is not a valid objection.
I think the right hon. and learned Gentleman misunderstood my intervention at the time I made it, but my hon. Friend

the Member for Bath (Mr. Pitman) put the matter very clearly, as did my hon. Friend the Member for Sutton Coldfield (Sir J. Mellor). If their line of argument is correct—and, subject to anything that the Attorney-General says, I believe it to be—it will make no difference to the Exchequer whatever if the parent company in the United Kingdom transfers some part of its holding in a foreign subsidiary to an individual holding as nominee of the parent company. If that objection has gone, and since the Attorney-General has given no other objection against accepting this Amendment, I hope he will now be able to tell the Committee that he is disposed to accept it, either in the form in which it now stands or in general principle, which principle he will embody in other words.

The Attorney-General: When I was describing the evasion device, I made a slight error which I desire to amend. It is perfectly right that if the individual to whom shares are transferred is a nominee, in the result it will not make much difference to the amount which ultimately comes to the Revenue when the parent company here distributes what comes from the overseas company. I desire to amend that in this way.
The kind of case we have in mind is when the shares are transferred, not to a nominee, but to a person in his own right. For example, the parent company owns shares in a subsidiary company abroad. It owns a subsidiary company abroad, and the evasion device we fear is that it would be possible, if this Amendment is accepted, for shares to be transferred to an individual. That individual might be either a director of the company or his wife or his daughter or some other child of the person who runs or controls the parent company.
5.15 p.m.
It is perfectly true that in the case of this person the dividends received from the overseas subsidiary would be liable to Income Tax and Surtax; but if the shares were distributed to a number of such people—to the wife and daughters, or whoever it might be—payment of tax to a very considerable amount could be avoided. That is to say, if the aggregate amount of dividend which they receive from the overseas company was always less than £2,000 together with their other income, it would be possible to get from


the overseas subsidiary very considerable amounts which they would spend as part of their income. If they are all members of the same family, by this device there would be a considerable evasion of tax. There might be five or six children each having enough shares to produce £2,000 worth of income so that there would be £12,000 which ought to be producing tax. That is the sort of thing we have in mind.

Mr. Pitman: It is clear that this is a transfer without any consideration at all. It is not a sale of shares.

The Attorney-General: In such a case it would no doubt be a transfer without consideration, and that is within the Clause. If hon. Members suggest excluding transfers without consideration that could be got rid of because there could be a transfer for a nominal consideration. So it does not make much difference whether it is a transfer with consideration or without.

Mr. Pitman: Mr. Pitman rose—

The Attorney-General: May I make my speech and then I will try to meet points which may be raised? That is the kind of thing we are frightened of if we accept this Amendment. As has been pointed out, the prohibition of a transfer without consent in a particular case may interfere with people with whom we do not desire to interfere at all. The hon. Member for Burton (Mr. Colegate) mentioned an obvious case, and the hon. Member for Chippenham (Mr. Eccles) mentioned a case in which shares were transferred as a reward to a resident manager or engineer overseas. Circumstances vary almost infinitely, but I would say with regard to that kind of transfer, although as I say it varies, that in general that is the kind of case in which consent would be forthcoming, although I do not say in every case.
I do not think that hon. Members should be so anxious about the difficulty of obtaining consent. It would not be a cumbersome and difficult process. Yesterday, in describing the procedure, my right hon. Friend intimated that a clear case with no complications about it would be referred to the Inland Revenue who would deal with it straight away. It is only a case with features of suspicion or complication which required further investigation that would have to be dealt with by other advisers of my right hon. Friend.

Ordinarily there would not be very much difficulty. Ordinarily what happens? The prohibition alights upon the company in the United Kingdom which has to obtain the consent. That does not mean coming from any other person. It does not mean consent from abroad. It means simply the United Kingdom company has to ask for consent, and there should be no difficulty.
My right hon. Friend also intimated that it would be possible to exclude categories of transactions—I am not saying that any of the types of transaction mentioned this afternoon would or would not come within those categories—in order to minimise so far as possible interference with ordinary business operations of this class. He had in mind to make it possible, not merely to give consent in particular cases, but to exclude by description whole categories of cases.
As hon. Members know, that is the scheme of the Exchange Control Act. In this particular case categories could be excluded and I am not saying even that the type of case mentioned by the hon. Member for Burton would be excluded, but that there would be power to do that. Therefore, when the Clause is finally worked out and categories are described and included in the dispensation, we earnestly hope that the amount of interference due to its operation will be reduced to an absolute minimum.
To get back to the merits of the case, I have given the reason which makes us reluctant to accept the Amendment. We think it would open the way to make it possible for that sort of evasion which, if it happened on a large scale, might result in fairly substantial losses. Therefore, we are not prepared to accept the Amendment.
I am not sure that hon. Members are quite certain of the purpose of the particular paragraph. The hon. Member for Bath (Mr. Pitman), did not seem to have clearly in his mind what is intended by this paragraph. What it does is prevent a United Kingdom company from transfering shares in an overseas subsidiary, which it owns or partly owns. The kind of thing we have in mind is this. A United Kingdom company owns a subsidiary in South Africa. If we do not have this paragraph, what can be done is that the United Kingdom company can transfer its holding in the Commonwealth


subsidiary to a new company, which it forms in the Bahamas, for example, where there is no tax or very low taxation.

Mr. Pitman: That is not in the Amendment.

The Attorney-General: I am simply making these observations because, after listening to what has been said, and rereading' yesterday's debate, I was not quite certain that the Committee were clearly informed of the purpose of this particular paragraph. I quite agree that it does not arise on this Amendment, but I am doing this to make the position clear.
As I said, the English company forms a company in the Bahamas where there is a low rate of tax, and it then transfers to the Bahamas subsidiary its holdings of shares in the South African company, so that the income of the South African company goes to the subsidiary in the Bahamas. Then the subsidiary in the Bahamas passes the income, which flows to it from the South African subsidiary, to the English parent company in some non-taxable form, such as an issue of bonus shares. It is that kind of transaction, which this paragraph is designed to prevent.
As I have said, we cannot accept the Amendment for the reasons I have given and because of the type of evasion which we feel might arise, but by the use of the permissive power and possibly—although I cannot commit myself—by the use of the dispensation in relation to whole categories and descriptions of cases, we hope to bring it about that the paragraph will operate in such a way as to give the absolute minimum of interference to business operations.

Mr. Oliver Lyttelton: I want to ask one or two questions and correct a few points for the Attorney-General. First of all, am I right in supposing that nothing is to be written into the Bill about dispensations? We are asked to accept this on the general proposition that the Treasury will be sympathetic to certain classes and cases. Is that correct? Nothing is to be written into the Bill, but we have to accept it that the Treasury will in the future work out these things. When the Attorney-General was speaking, he used the phrase, "when the Clause has been

worked out." I suppose it is old-fashioned to expect a Clause to be worked out before coming to the Committee. I take it that that means that the Government have decided that nothing is to be written into the Bill.
Secondly. I want to correct the Attorney-General on a matter of fact. He said that as a matter of course certain categories would be exempt. It might interest him to know that three or four months ago I had personally to conduct negotiations with the Inland Revenue concerning the expenses of a director who was ill. I had to go personally to the senior inspector of taxes and conduct these negotiations, and ultimately there was agreement. The sum at stake was £140. It is an absolute delusion to suppose that these things go through very sympathetically. I see the hon. Member for Sowerby (Mr. Houghton) chuckling.

Mr. Douglas Houghton: On that occasion evidently it was not a matter of course.

Mr. Lyttelton: One would have thought it a matter of course. If the hon. Member is interested in the case, it concerned a director with a bad heart. The doctor's certificate stated that he could not go to South Africa on the company's business unless he were accompanied by a doctor, his wife or his daughter. The Inland Revenue thought that was ridiculous and would not believe it. I personally, had to go to Somerset House and spend part of my valuable time and part of the even more valuable time of the inspector of taxes in getting £140 from the Inland Revenue. The wages bill of that particular company was £365,000 a week.

Mr. Turner-Samuels: Was it worth it?

Mr. Lyttelton: In these days when incomes are so limited, except those of horn and learned Gentlemen with large practices at the bar, a matter of £140 a year is of great importance. It is this general mentality that money does not matter that has got us into the kind of jam that makes high taxation necessary. I am surprised at the intervention.
We want a little more information from the Attorney-General than his argument that everything is for the best in the best


of all possible Treasuries. We had a voyage from the Bahamas to South Africa, and the right hon. and learned Gentleman referred to United Kingdom securities passing between South Africa and the Bahamas. He omitted from his purview the perfectly legitimate case of a company like Harrod's Stores, which have a subsidiary company in Buenos Aires and wish to transfer some of their shares to people who live in the Argentine.
I had hoped that this would appeal to the sympathies of the Economic Secretary, with his recent experience of Argentina. I should not have thought of the transaction which the Attorney-General outlined. I should not have the ingenuity to do it in the way the Attorney-General mentioned, but if it happens let us go for that company; do not let us touch the very large volume of perfectly normal transactions which are of advantage to the country.

Mr. Eccles: I want to ask the Attorney-General one question. As I understand it, one of the purposes for this particular paragraph is concerned with a company here that has shares in a subsidiary and which might distribute them to one or more individuals or members of a family. In that way the Revenue would suffer because of the wide distribution of shares to people with under £2,000 a year. We are allowed to do it with the shares of a subsidiary if it happens to be stationed in this country. As far as I know, it is perfectly proper to transfer to my son and daughter some shares in a small business which I have in Wiltshire, but if the business happens to be overseas, I am not allowed to do it.
Next year, if the present Chancellor is still there, he might add a Clause to the Finance Bill saying that no one is to give his family any shares at all in any business which he happens to control. Why do the Government object to the transfer of shares in an overseas company to members of a family or friend and not object when it is done in this country? It seems ridiculous to us.

5.30 p.m.

Mr. Hugh Fraser: I think that the Attorney-General's explanation was not very satisfactory. He talked about these categories but, as my right hon. Friend the Member for Aldershot (Mr. Lyttelton) has elucidated

from him, these categories are to be things kept somewhere inside the Inland Revenue Department; they are not to be included in the Bill, and therefore, we are at the tender mercies of the Treasury.
The Financial Secretary to the Treasury, in the debate yesterday evening, made perfectly clear that he was not drawing any distinction between avoidance of taxation and evasion, which is the point which has been made very clear by my hon. Friend the Member for Chippenham (Mr. Eccles). It is quite clear that if the Treasury are in charge of these matters, there will be a merciless and ruthless pursuit of anyone who makes any effort to avoid any taxation whatsoever, and that therefore all these categories, even if they are created, will always be interpreted in the most hostile way against anyone who by his action might, amongst other things, avoid taxation, however good the main object of the move of capital should be.
Then we have these examples produced by the Attorney-General. My hon. Friend the Member for Chippenham has dealt with one example—that of the family division of shares—which, apparently, is to be allowed to take place in this country but not allowed to take place overseas. We then came to the Attorney-General's extraordinary description of a mining company which would arrange for the transfer of some of its shares to a holding company in the Bahamas, which would then issue bonus shares to its shareholders in England.
That type of fantasy can only come from the unfortunate Attorney-General having had to do far too much work, gallantly though he has done it, over the last 48 hours. If he could produce any example of any such thing taking place, we should be most interested, but to believe that the serious mining trust companies in this country, or companies which have overseas subsidiaries of any sort, are going to do this kind of thing, is really straight out of the mind of a beachcomber or someone who is not in touch with reality.
Again and again we have had the example that this kind of evasion might take place in some form of bonus issue. Surely the right hon. and learned Gentleman is aware that bonus issues are controlled in any case by the Capital Issues Committee, and that if need be the type


of transaction which he envisages taking place could in any case be controlled. As my right hon. Friend the Member for Aldershot said, it is typical of the Government throwing wide the net in the hope of catching the whales, who undoubtedly will escape, and trapping companies. Above all, they are putting off companies from bringing the much-needed capital into the development of this country and of our Colonial Empire and Commonwealth.
The harm which the subsection can do is considerable. It is one more deterrent to American and foreign money coming to this country. It is one more deterrent against this country and the City of London remaining the centre and magnet of the economic world, and I hope that when the Chancellor of the Exchequer considers this thing, he will accept the validity, the strength and the power of the argument which has been put forward by this side of the Committee.

Mr. Royle (Lord Commissioner of the Treasury): Mr. Royle (Lord Commissioner of the Treasury) rose in his place and claimed to move. "That the Question be now put."

Mr. Pitman: On a point of order. The Attorney-General put a hypothetical case. The whole of the debate was on that hypothetical case until a very late moment in the debate, when the right hon. and learned Gentleman put the real issue of the Treasury case. There has been very little debate indeed on that particular issue, and I think that the Attorney-General would agree on that point.

The Deputy-Chairman: That is not a point of order.

Question put accordingly, "That 'non-resident' be there inserted."

The Committee divided: Ayes. 284: Noes, 300.

Division No. 130.]
AYES
[5.39 p.m.


Aitken, W. T.
Clarke, Brig. Terence (Portsmouth, W.)
Garner-Evans, E. H. (Denbigh)


Alport, C. J. M.
Clyde, J. L.
Gates, Maj. E. E.


Amery, Julian (Preston, N.)
Colegate, A.
Glyn, Sir Ralph


Amory, Heathcoat (Tiverton)
Cooper, Sqn. Ldr. Albert (Ilford, S.)
Gomme-Duncan, Col. A.


Arbuthnot, John
Cooper-Key, E. M.
Gridley, Sir Arnold


Ashton, H. (Chelmsford)
Corbett, Lt.-Col. Uvedale (Ludlow)
Grimond, J.


Assheton, Rt. Hon. R. (Blackburn, W.)
Craddock, Beresford (Spelthorne)
Grimston, Hon. John (St. Albans)


Astor, Hon. M. L.
Cranborne, Viscount
Grimston, Robert (Westbury)


Baker, P. A. D.
Crookshank, Capt. Rt. Hon. H. F. C.
Harden, J. R. E.


Baldock, Lt.-Cmdr. J. M.
Crosthwaite-Eyre, Col. O. E.
Hare, Hon. J. H. (Woodbridge)


Baldwin, A. E.
Crouch, R. F.
Harris, Frederic (Croydon, N.)


Banks, Col. C.
Crowder, Capt. John (Finchley)
Harris, Reader (Heston)


Baxter, A. B.
Crowder, Petre (Ruislip—Northwood)
Harvey, Air Cdre. A. V. (Macclesfield)


Beamish, Maj. Tufton
Cundiff, F. W.
Harvey, Ian (Harrow, E.)


Bell, R. M.
Cuthbert, W. N.
Harvie-Watt, Sir George


Bennett, Sir Peter (Edgbaston)
Darling, Sir William (Edinburgh, S.)
Hay, John


Bennett, Dr. Reginald (Gosport)
Davidson, Viscountess
Head, Brig. A. H.


Bennett, William (Woodside)
Davies, Nigel (Epping)
Headlam, Lt.-Col. Rt. Hon. Sir Cuthbert


Bevins, J. R. (Liverpool, Toxteth)
de Chair, Somerset
Heald, Lionel


Birch, Nigel
De la Bère, R.
Heath, Edward


Bishop, F. P.
Deedes, W. F.
Henderson, John (Cathcart)


Black, C. W.
Digby, S. Wingfield
Hicks-Beach, Maj. W. W.


Boles, Lt.-Col. D. C. (Wells)
Dodds-Parker, A. D.
Higgs, J. M. C.


Boothby, R.
Donner, P. W.
Hill, Dr. Charles (Luton)


Bossom, A. C.
Douglas-Hamilton, Lord Malcolm
Hill, Mrs. E. (Wythenshawe)


Boyd-Carpenter, J. A.
Drayson, G. B.
Hinchingbrooke, Viscount


Boyle, Sir Edward
Drewe, C.
Hirst, Geoffrey


Bracken, Rt. Hon. B.
Dugdale, Maj. Sir T. (Richmond)
Hollis, M. C.


Braine, B. R.
Duncan, Capt. J. A. L.
Holmes, Sir Stanley (Harwich)


Braithwaite, Sir Albert (Harrow, W.)
Dunglass, Lord
Hope, Lord John


Braithwaite, Lt.-Cr. G. (Bristol, N. W.)
Duthie, W. S.
Hopkinson, Henry


Bromley-Davenport, Lt.-Col. W.
Eccles, D. M.
Hornsby-Smith, Miss P.


Brooke, Henry (Hampstead)
Eden, Rt. Hon. A.
Horsbrugh, Rt. Hon. Florence


Browne, Jack (Govan)
Erroll, F. J.
Howard, Gerald (Cambridgeshire)


Buchan-Hepburn, P. G. T.
Fisher, Nigel
Howard, Greville (St. Ives)


Bullus, Wing Commander E. E.
Fort, R.
Hudson, Sir Austin (Lewisham, N.)


Burden, F. A.
Foster, John
Hudson, Rt. Hon. Robert (Southport)


Butcher, H. W.
Fraser, Hon. Hugh (Stone)
Hudson, W. R. A. (Hull, N.)


Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)
Fraser, Sir Ian (Morecambe &amp; Lonsdale)
Hurd, A. R.


Carr, Robert (Mitcham)
Fyfe, Rt. Hon. Sir David Maxwell
Hutchinson, Geoffrey (Ilford, N.)


Carson, Hon. E.
Gage, C. H.
Hutchison, (Lt.-Com. Clark (E'b'rgh W.)


Channon, H.
Galbraith, Cmdr. T. D. (Pollok)
Hutchison, Col. James (Glasgow)


Churchill, Rt. Hon. W. S.
Galbraith, T. G. D. (Hillhead)
Hyde, Lt.-Col. H. M.


Clarke, Col. Ralph (East Grinstead)
Gammans, L. D.
Hylton-Foster, H. B.




Jeffreys, General Sir George
Morrison, John (Salisbury)
Spence, H. R. (Aberdeenshire, W.)


Jennings, R.
Morrison, Rt. Hon. W. S. (Cirencester)
Spens, Sir Patrick (Kensington, S.)


Johnson, Howard (Kemptown)
Mott-Radclyffe, C. E.
Stanley, Capt. Hon. Richard (N. Fylde)


Jones, A. (Hall Green)
Nabarro, G.
Stevens, G. P.


Joynson-Hicks, Hon. L. W.
Nicholls, Harmar
Steward, W. A. (Woolwich, W.)


Kaberry, D.
Nicholson, G.
Stewart, Henderson (Fife, E.)


Kerr, H. W. (Cambridge)
Nield, Basil (Chester)
Stoddart-Scott, Col. M.


Lambert, Hon. G.
Noble, Cmdr. A. H. P.
Storey, S.


Lancaster, Col. C. G.
Nugent, G. R. H.
Strauss, Henry (Norwich, S.)


Langford-Holt, J.
Nutting, Anthony
Stuart, Rt. Hon. James (Moray)


Law, Rt. Hon. R. K.
Oakshott, H. D.
Studholme, H. G.


Leather, E. H. C.
Odey, G. W.
Summers, G. S.


Legge-Bourke, Maj. E. A. H.
O'Neill, Rt. Hon. Sir Hugh
Sutcliffe, H.


Lennox-Boyd, A. T.
Ormsby-Gore, Hon. W. D.
Taylor, Charles (Eastbourne)


Lindsay, Martin
Orr, Capt. L. P. S.
Taylor, William (Bradford, N.)


Linstead, H. N.
Orr-Ewing, Charles Ian (Hendon, N.)
Teeling, W.


Llewellyn, D.
Orr-Ewing, Ian L. (Weston-super-Mare)
Teevan, T. L.


Lloyd, Rt. Hon. G. (King's Norton)
Osborne, C.
Thomas, J. P. L. (Hereford)


Lloyd, Maj. Guy (Renfrew, E.)
Peake, Rt. Hon. O.
Thompson, Kenneth Pugh (Walton)


Lloyd, Selwyn (Wirral)
Perkins, W. R. D.
Thompson, Lt.-Cmdr. R. (Croydon, W.)


Lockwood, Lt.-Col. J. C.
Peto, Brig. C. H. M.
Thorneycroft, Peter (Monmouth)


Longden, Gilbert (Herts, S. W.)
Pickthorn, K.
Thornton-Kemsley, Col. C. N.


Low, A. R. W.
Pitman, I. J.
Thorp, Brig. R. A. F.


Lucas, Sir Jocelyn (Portsmouth, S.)
Powell, J. Enoch
Tilney, John


Lucas, P. B. (Brentford)
Price, Henry (Lewisham, W.)
Turner, H. F. L.


Lucas-Tooth, Sir Hugh
Prior-Palmer, Brig. O.
Turton, R. H.


Lyttelton, Rt. Hon. O.
Profumo, J. D.
Tweedsmuir, Lady


McAdden, S. J.
Raikes, H. V.
Vane, W. M. F.


McCorquodale, Rt. Hon. M. S.
Redmayne, M.
Vaughan-Morgan, J. K.


Macdonald, Sir Peter (I. of Wight)
Remnant, Hon. P.
Vosper, D. F.


Mackeson, Brig. H. R.
Renton, D. L. M.
Wade, D. W.


McKibbin, A.
Roberts, Maj. Peter (Heeley)
Wakefield, Edward (Derbyshire, W.)


McKie, J. H. (Galloway)
Robertson, Sir David (Caithness)
Wakefield, Sir Wavell (Marylebone)


Maclay, Hon. John
Robinson, Roland (Blackpool, S.)
Walker-Smith, D. C.


Maclean, Fitzroy
Robson-Brown, W.
Ward, Hon. George (Worcester)


MacLeod, Iain (Enfield, W.)
Rodgers, John (Sevenoaks)
Ward, Miss I. (Tynemouth)


MacLeod, John (Ross and Cromarty)
Roper, Sir Harold
Waterhouse, Capt. Rt. Hon. C.


Macmillan, Rt. Hon. Harold (Bromley)
Ropner, Col. L
Watkinson, H.


Macpherson, Major Niall (Dumfries)
Russell, R. S.
Webbe, Sir H. (London &amp; Westminster)


Maitland, Cmdr. J. W.
Ryder, Capt. R. E. D.
White, Baker (Canterbury)


Manningham-Buller, R. E.
Salter, Rt. Hon. Sir Arthur
Williams, Charles (Torquay)


Marlowe, A. A. H.
Sandys, Rt. Hon. D.
Williams, Gerald (Tonbridge)


Marples, A. E.
Savory, Prof. D. L.
Williams, Sir Herbert (Croydon, E.)


Marshall, Douglas (Bodmin)
Scott, Donald
Wills, G.


Maude, Angus (Ealing, S.)
Shepherd, William
Wilson, Geoffrey (Truro)


Maude, John (Exeter)
Smiles, Lt.-Col. Sir Walter
Winterton, Rt. Hon. Earl


Maudling, R.
Smithers, Peter (Winchester)
Wood, Hon. R.


Medlicott, Brig. F.
Smithers, Sir Waldron (Orpington)
York, C.


Mellor, Sir John
Smyth, Brig. J. G. (Norwood)



Molson, A. H. E.
Snadden, W. MoN.
TELLERS FOR THE AYES:


Monckton, Sir Walter
Soames, Capt. C.
Major Conant and Major Wheatley.


Moore, Lt.-Col. Sir Thomas
Spearman, A. C. M.





NOES


Acland, Sir Richard
Brook, Dryden (Halifax)
Dalton, Rt. Hon. H.


Adams, Richard
Brooks, T. J. (Normanton)
Darling, George (Hillsborough)


Albu, A. H.
Brown, Rt. Hon. George (Belper)
Davies, A. Edward (Stoke, N.)


Allen, Arthur (Bosworth)
Brown, Thomas (Ince)
Davies, Rt. Hon. Clement (Montgomery)


Allen, Scholefield (Crewe)
Burke, W. A.
Davies, Harold (Leek)


Anderson, Alexander (Motherwell)
Burton, Miss E.
Davies, Stephen (Merthyr)


Anderson, Frank (Whitehaven)
Butler, Herbert (Hackney, S.)
de Freitas, Geoffrey


Attlee, Rt. Hon. C. R.
Callaghan, L. J.
Deer, G.


Awbery, S. S.
Carmichael, J.
Delargy, H. J.


Ayles, W. H.
Castle, Mrs. B. A.
Dodds, N. N.


Bacon, Miss Alice
Champion, A. J.
Donnelly, D.


Baird, J.
Chetwynd, G. R.
Driberg, T. E. N.


Balfour, A.
Clunie, J.
Dugdale, Rt. Hon J. (W Bromwich)


Barnes, Rt. Hon. A. J.
Cocks, F. S.
Dye, S.


Bartley, P.
Coldrick, W.
Ede, Rt. Hon. J. C.


Bellenger, Rt. Hon. F. J.
Collick, P.
Edelman, M.


Benn, Wedgwood
Collindridge, F.
Edwards, John (Brighouse)


Benson, G.
Cook, T. F.
Edwards, Rt. Hon. Ness (Caerphilly)


Beswick, F.
Cooper, Geoffrey (Middlesbrough, W.)
Edwards, W. J. (Stepney)


Bevan, Rt. Hon. A. (Ebbw Vale)
Cooper, John (Deptford)
Evans, Albert (Islington, S. W.)


Bing, G. H. C.
Corbet, Mrs. Freda (Peckham)
Evans, Edward (Lowestoft)


Blenkinsop, A.
Cove, W. G.
Evans, Stanley (Wednesbury)


Blyton, W. R.
Craddock, George (Bradford, S.)
Ewart, R.


Boardman, H.
Crawley, A.
Fernyhough, E.


Booth, A.
Crosland, C. A. R.
Field, Capt. W. J.


Bottomley, A. G.
Crossman, R. H. S.
Finch, H. J.


Bowden, H. W.
Cullen, Mrs. A.
Fletcher, Eric (Islington, E.)


Bowles, F. G. (Nuneaton)
Daines, P.
Follick, M.







Foot, M. M.
Lewis, John (Bolton, W.)
Rogers, George (Kensington, N.)


Forman, J. C.
Lindgren, G. S.
Ross, William


Fraser, Thomas (Hamilton)
Lipton, Lt.-Col. M.
Shackleton, E. A. A.


Freeman, John (Watford)
Logan, D. G.
Shawcross, Rt. Hon. Sir Hartley


Freeman, Peter (Newport)
Longden, Fred (Small Heath)
Shinwell, Rt. Hon. E.


Gaitskell, Rt. Hon. H. T. N.
McAllister, G.
Shurmer, P. L. E.


Ganley, Mrs. C. S.
MacColl, J. E.
Silverman, Julius (Erdington)


George, Lady Megan Lloyd
McGhee, H. G.
Silverman, Sydney (Nelson)


Gibson, C. W.
McGovern, J.
Simmons, C. J.


Gilzean, A.
McInnes, J.
Slater, J.


Glanville, James (Consett)
Mack, J. D.
Smith, Ellis (Stoke, S.)


Gooch, E. G.
McKay, John (Wallsend)
Smith, Norman (Nottingham. S.)


Gordon-Walker, Rt. Hon. P. C.
Mackay, R. W. G. (Reading, N.)
Snow, J. W.


Greenwood, Anthony (Rossendale)
McLeavy, F.
Sorensen, R. W.


Greenwood, Rt. Hn. Arthur (Wakefield)
MacMillan, Malcolm (Western Isles)
Soskice, Rt. Hon Sir Frank


Grenfell, Rt. Hon D. R.
McNeil, Rt. Hon. H.
Sparks, J. A.


Grey, C. F.
MacPherson, Malcolm (Stirling)
Steele, T.


Griffiths, David (Rother Valley)
Mainwaring, W. H.
Stewart, Michael (Fulham, E.)


Griffiths, Rt. Hon. James (Llanelly)
Mallalieu, E. L. (Brigg)
Stokes, Rt. Hon. R. R.


Griffiths, William (Exchange)
Mallalieu, J. P. W. (Huddersfield, E.)
Strachey, Rt. Hon. J.


Gunter, R. J.
Mann, Mrs. Jean
Strauss, Rt. Hon. George (Vauxhall)


Hale, Joseph (Rochdale)
Manuel, A. C.
Stross, Dr. Barnett


Hale, Leslie (Oldham, W.)
Marquand, Rt. Hon. H. A.
Summerskill, Rt. Hon. Edith


Hall, Rt. Hon. Glenvil (Colne Valley)
Mathers, Rt. Hon. G.
Sylvester, G. O.


Hall, John (Gateshead, W.)
Mellish, R. J.
Taylor, Bernard (Mansfield)


Hamilton, W. W.
Messer, F.
Taylor, Robert (Morpeth)


Hardman, D. R.
Middleton, Mrs. L.
Thomas, David (Aberdare)


Hardy, E. A.
Mikardo, Ian.
Thomas, George (Cardiff)


Hargreaves, A.
Mitchison, G. R.
Thomas, Iorwerth (Rhondda, W.)


Hastings, S.
Moeran, E. W.
Thomas, Ivor Owen (Wrekin)


Hayman, F. H.
Monslow, W.
Thorneycroft, Harry (Clayton)


Henderson, Rt. Hn. Arthur (Tipton)
Moody, A. S.
Thurtle, Ernest


Herbison, Miss M.
Morgan, Dr. H. B.
Timmons, J.


Hewitson, Capt. M.
Morley, R.
Tomney, F.


Hobson, C. R.
Morris, Percy (Swansea, W.)
Turner-Samuels, M.


Holman, P.
Morrison, Rt. Hon. H. (Lewisham, S.)
Ungoed-Thomas, Sir Lynn


Holmes, Horace (Hemsworth)
Mort, D. L.
Usborne, H.


Houghton, D.
Moyle, A.
Vernon, W. F.


Hoy, J.
Mulley, F. W.
Viant, S. P.


Hubbard, T.
Nally, W.
Wallace, H. W.


Hudson, James (Ealing, N.)
Neal, Harold (Bolsover)
Watkins, T. E.


Hughes, Emrys (S. Ayrshire)
Noel-Baker, Rt. Hon. P. J.
Webb, Rt. Hon. M. (Bradford, C.)


Hughes, Hector (Aberdeen, N.)
Oldfield, W. H.
Weitzman, D.


Hughes, Moelwyn (Islington, N.)
Oliver, G. H.
Wells, Percy (Faversham)


Hynd, H. (Accrington)
Orbach, M.
Wells, William (Walsall)


Hynd, J. B. (Attercliffe)
Padley, W. E.
West, D. G.


Irvine, A. J. (Edge Hill)
Paget R. T.
Wheatley, Rt. Hon. John (Edinb'gh E.)


Irving, W. J. (Wood Green)
Paling, Rt. Hon. Wilfred (Dearne V'lly)
White, Mrs. Eirene (E. Flint)


Isaacs, Rt. Hon. G. A.
Paling, Will T. (Dewsbury)
White, Henry (Derbyshire, N.E.)


Janner, B.
Pannell, T. C.
Whiteley, Rt. Hon. W.


Jay, D. P. T.
Pargiter, G. A.
Wigg, G.


Jeger, George (Goole)
Parker, J.
Wilcock, Group Capt. C. A. B.


Jeger, Dr. Santo (St. Pancras, S.)
Paton, J.
Wilkes, L.


Jenkins, R. H.
Pearson, A.
Wilkins, W. A.


Johnson, James (Rugby)
Peart, T. F.
Willey, Frederick (Sunderland)


Johnston, Douglas (Paisley)
Popplewell, E.
Willey, Octavius (Cleveland)


Jones, David (Hartlepool)
Porter, G.
Williams, David (Neath)


Jones, Frederick Elwyn (W Ham, S.)
Price, Philips (Gloucestershire, W.)
Williams, Rev. Llywelyn (Abertillery)


Jones, Jack (Rotherham)
Proctor, W. T.
Williams, Ronald (Wigan)


Jones, William Elwyn (Conway)
Pryde, D. J.
Williams, Rt. Hon. Thomas (Don V'lly)


Keenan, W.
Pursey, Cmdr. H.
Williams, W. T. (Hammersmith, S.)


Kenyon, C.
Rankin, J.
Wilson, Rt. Hon. Harold (Huyton)


Key, Rt. Hon. C. W.
Rees, Mrs. D.
Winterbottom, Ian (Nottingham, C.)


King, Dr. H. M.
Reeves, J.
Winterbottom, Richard (Brightside)


Kinghorn, Sqn. Ldr. E.
Reid, Thomas (Swindon)
Wise, F. J.


Kinley, J.
Reid, William (Camlachie)
Woodburn, Rt. Hon. A.


Kirkwood, Rt. Hon. D.
Rhodes, H.
Woods, Rev. G. S.


Lang, Gordon
Richards, R.
Wyatt, W. L.


Lee, Frederick (Newton)
Rubens, Rt. Hon. A.
Yates, V. F.


Lee, Miss Jennie (Cannock)
Roberts, Emrys (Merioneth)
Younger, Rt. Hon. K.


Lever, Harold (Cheetham)
Roberts, Goronwy (Caernarvonshire)
TELLERS FOR THE NOES:


Lever, Leslie (Ardwick)
Robertson, J. J. (Berwick)
Mr. Hannan and Mr. Royle.


Lewis, Arthur (West Ham, N.)
Robinson, Kenneth (St. Pancras, N.)



Question, "That the Question be now put," put, and agreed to.

Mr. Selwyn Lloyd: I beg to move, in page 24, line 26, at the end, to insert:
and
(iii) without prejudice to the power of the Treasury to give consent under proviso

(ii) to any other transactions, that consent shall not be withheld from any transaction or transactions falling within any of the paragraphs of this subsection

(a) if the main purpose of the transaction is either the better development of the trade or business or part of the trade


or business or to comply with the directions or expressed wishes of any overseas government or authority, or
(b) if as a result of the transaction a trade or business or part of a trade or business is transferred to another country, the greater part of the assets of that trade

or business or that part of the trade or business is situated in that country."

Question put, "That those words be there inserted."

The Committee divided: Ayes, 285; Noes, 300.

Division No. 131.]
AYES
[5.51 p.m.


Aitken, W. T.
Dugdale, Maj. Sir T. (Richmond)
Legge-Bourke, Maj. E. A. H.


Alport, C. J. M.
Duncan, Capt. J. A. L.
Lennox-Boyd, A. T.


Amery, Julian (Preston, N.)
Dunglass, Lord
Lindsay, Martin


Amory, Heathcoat (Tiverton)
Duthie, W. S.
Linstead, H. N.


Arbuthnot, John
Eccles, D. M.
Llewellyn, D.


Ashton, H. (Chelmsford)
Eden, Rt. Hon. A.
Lloyd, Rt. Hon. G. (King's Norton)


Assheton, Rt. Hon. R. (Blackburn, W.)
Erroll, F. J.
Lloyd, Maj. Guy (Renfrew, E.)


Astor, Hon. M. L.
Fisher, Nigel
Lloyd, Selwyn (Wirral)


Baker, P. A. D.
Fort, R.
Lockwood, Lt.-Col. J. C.


Baldock, Lt.-Cmdr. J. M.
Foster, John
Longden, Gilbert (Herts, S. W.)


Baldwin, A. E.
Fraser, Hon. Hugh (Stone)
Low, A. R. W.


Banks, Col. C.
Fraser, Sir Ian (Morecambe &amp; Lonsdale)
Lucas, Sir Jocelyn (Portsmouth, S.)


Baxter, A. B.
Fyfe, Rt. Hon. Sir David Maxwell
Lucas, P. B. (Brentford)


Beamish, Maj. Tufton
Gage, C. H.
Lucas-Tooth, Sir Hugh


Bell, R. M.
Galbraith, Cmdr. T. D. (Pollok)
Lyttelton, Rt. Hon. O.


Bennett, Sir Peter (Edgbaston)
Galbraith, T. G. D. (Hillhead)
McAdden, S. J.


Bennett, Dr. Reginald (Gosport)
Gammans, L. D.
McCorquodale, Rt. Hon. M. S.


Bennett, William (Woodside)
Garner-Evans, E. H. (Denbigh)
Macdonald, Sir Peter (I. of Wight)


Bevins, J. R. (Liverpool, Toxteth)
Gates, Maj. E. E.
Mackeson, Brig. H. R.


Birch, Nigel
Glyn, Sir Ralph
McKibbin, A.


Bishop, F. P.
Gomme-Duncan, Col. A.
McKie, J. H. (Galloway)


Black, C. W.
Gridley, Sir Arnold
Maclay, Hon. John


Boles, Lt.-Col. D. C. (Wells)
Grimond, J.
Maclean, Fitzroy


Boothby, R.
Grimston, Hon. John (St. Albans)
MacLeod, Iain (Enfield, W.)


Bossom, A. C.
Grimston, Robert (Westbury)
MacLeod, John (Ross and Cromarty)


Boyd-Carpenter, J. A.
Harden, J. R. E.
Macmillan, Rt. Hon. Harold (Bromley)


Boyle, Sir Edward
Hare, Hon. J. H. (Woodbridge)
Macpherson, Major Niall (Dumfries)


Bracken, Rt. Hon. B.
Harris, Frederic (Croydon, N.)
Maitland, Cmdr. J. W.


Braine, B. R.
Harris, Reader (Heston)
Manningham-Buller, R. E.


Braithwaite, Sir Albert (Harrow, W.)
Harvey, Air Cdre. A. V. (Macclesfield)
Marlowe, A. A. H.


Braithwaite, Lt.-Cr. G. (Bristol, N. W.)
Harvey, Ian (Harrow, E.)
Marples, A. E.


Bromley-Davenport, Lt.-Col. W.
Harvie-Watt, Sir George
Marshall, Douglas (Bodmin)


Brooke, Henry (Hampstead)
Hay, John
Maude, Angus (Ealing, S.)


Browne, Jack (Govan)
Head, Brig. A. H.
Maude, John (Exeter)


Buchan-Hepburn, P. G. T.
Headlam, Lt.-Col. Rt. Hon. Sir Cuthbert
Maudling, R.


Bullock, Capt. M.
Heald, Lionel
Medlicott, Brig. F.


Bullus, Wing Commander E. E.
Henderson, John (Cathcart)
Mellor, Sir John


Burden, F. A.
Hicks-Beach, Maj. W. W.
Molson, A. H. E.


Butcher, H. W.
Higgs, J. M. C.
Monckton, Sir Walter


Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)
Hill, Dr. Charles (Luton)
Moore, Lt.-Col. Sir Thomas


Carr, Robert (Mitcham)
Hill, Mrs. E. (Wythenshawe)
Morrison, John (Salisbury)


Carson, Hon. E.
Hinchingbrooke, Viscount
Morrison, Rt. Hon. W. S. (Cirencester)


Channon, H.
Hirst, Geoffrey
Mott-Radclyffe, C. E.


Churchill, Rt. Hon. W. S.
Hollis, M. C.
Nabarro, G.


Clarke, Col. Ralph (East Grinstead)
Holmes, Sir Stanley (Harwich)



Clarke, Brig. Terence (Portsmouth, W.)
Hope, Lord John
Nicholls, Harmar


Clyde, J. L.
Hopkinson, Henry
Nicholson, G.


Colegate, A.
Hornsby-Smith, Miss P.
Nield, Basil (Chester)


Cooper, Sqn. Ldr. Albert (Ilford, S.)
Horsbrugh, Rt. Hon. Florence
Noble, Cmdr. A. H. P.


Cooper-Key, E. M.
Howard, Gerald (Cambridgeshire)
Nugent, G. R. H.


Corbett, Lt.-Col. Uvedale (Ludlow)
Howard, Greville (St. Ives)
Nutting, Anthony


Craddock, Beresford (Spelthorne)
Hudson, Sir Austin (Lewisham, N.)
Oakshott, H. D.


Cranborne, Viscount
Hudson, Rt. Hon. Robert (Southport)
Odey, G. W.


Crookshank, Capt. Rt. Hon. H. F. C.
Hudson, W. R. A. (Hull, N.)
O'Neill, Rt. Hon. Sir Hugh


Crosthwaite-Eyre, Col. O. E.
Hurd, A. R.
Ormsby-Gore, Hon. W. D.


Crouch, R. F.
Hutchinson, Geoffrey (Ilford, N.)
Orr, Capt. L. P. S.


Crowder, Capt. John (Finchley)
Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Orr-Ewing, Charles Ian (Hendon, N.)


Crowder, Petre (Ruislip—Northwood)
Hutchison, Col. James (Glasgow)
Orr-Ewing, Ian L. (Weston-super-Mare)


Cundiff, F. W.
Hyde, Lt.-Col. H. M.
Osborne, C.


Cuthbert, W. N.
Hylton-Foster, H. B.
Peake, Rt. Hon. O.


Darling, Sir William (Edinburgh. S)
Jeffreys, General Sir George
Perkins, W. R. D.


Davidson, Viscountess
Jennings, R.
Peto, Brig. C. H. M.


Davies, Nigel (Epping)
Johnson, Howard (Kemptown)
Pickthorn, K.


de Chair, Somerset
Jones, A. (Hall Green)
Pitman, I. J.


De la Bère, R.
Joynson-Hicks, Hon. L. W.
Powell, J. Enoch


Deedes, W. F.
Kaberry, D.
Price, Henry (Lewisham, W.)


Digby, S. Wingfield
Kerr, H. W. (Cambridge)
Prior-Palmer, Brig. O.


Dodds-Parker, A. D.
Lambert, Hon. G.
Profumo, J. D.


Donner, P. W.
Lancaster, Col. C. G.
Raikes, H. V.


Douglas-Hamilton, Lord Malcolm
Langford-Holt, J.
Redmayne, M.


Drayson, G. B.
Law, Rt. Hon. R. K.
Remnant, Hon. P.


Drewe, C.
Leather, E. H. C.
Renton, D. L. M.




Roberts, Maj. Peter (Heeley)
Stevens, G. P.
Vane, W. M. F.


Robertson, Sir David (Caithness)
Steward, W. A. (Woolwich, W.)
Vaughan-Morgan, J. K.


Robinson, Roland (Blackpool, S.)
Stewart, Henderson (Fife, E.)
Vosper, D. F.


Robson-Brown, W.
Stoddart-Scott, Col. M.
Wade, D. W.


Rodgers John (Sevenoaks)
Storey, S.
Wakefield, Edward (Derbyshire, W.)


Roper, Sir Harold
Strauss, Henry (Norwich, S.)
Wakefield, Sir Wavell (Marylebone)


Ropner, Col. L.
Stuart, Rt. Hon. James (Moray)
Walker-Smith, D. C.


Russell, R. S.
Studholme, H. G.
Ward, Hon. George (Worcester)


Ryder, Capt. R. E. D.
Summers, G. S.
Ward, Miss I. (Tynemouth)


Salter, Rt. Hon. Sir Arthur
Sutcliffe, H.
Waterhouse, Capt. Rt. Hon. C.


Sandys, Rt. Hon. D.
Taylor, Charles (Eastbourne)
Watkinson, H.


Savory, Prof. D. L.
Taylor, William (Bradford, N.)
Webbe, Sir H. (London &amp; Westminster)


Scott, Donald
Teeling, W.
Wheatley, Maj. M. J. (Poole)


Shepherd, William
Teevan, T. L.
White, Baker (Canterbury)


Smiles, Lt.-Col. Sir Walter
Thomas, J. P. L. (Hereford)
Williams, Charles (Torquay)


Smithers, Peter (Winchester)
Thompson, Kenneth Pugh (Walton)
Williams, Gerald (Tonbridge)


Smithers, Sir Waldron (Orpington)
Thompson, Lt.-Cmdr. R. (Croydon, W.)
Williams, Sir Herbert (Croydon, E.)


Smyth, Brig. J. G. (Norwood)
Thorneycroft, Peter (Monmouth)
Wills, G.


Snadden, W. McN.
Thornton-Kemsley, Col. C. N.
Wilson, Geoffrey (Truro)


Soames, Capt. C.
Thorp, Brig. R. A. F.
Winterton, Rt. Hon. Earl


Spearman, A. C. M.
Tilney, John
Wood, Hon. R.


Spence, H. R. (Aberdeenshire, W.)
Turner, H. F. L.
York, C.


Spens, Sir Patrick (Kensington, S.)
Turton, R. H.



Stanley, Capt. Hon. Richard (N. Fylde)
Tweedsmuir, Lady
TELLERS FOR THE AYES:




Mr. Conant and Mr. Heath.




NOES


Acland, Sir Richard
Daines, P.
Hargreaves, A.


Adams, Richard
Dalton, Rt. Hon. H.
Hastings, S.


Albu, A. H.
Darling, George (Hillsborough)
Hayman, F. H.


Allen, Arthur (Bosworth)
Davies, A. Edward (Stoke, N.)
Henderson, Rt. Hn. Arthur (Tipton)


Allen, Scholefield (Crewe)
Davies, Harold (Leek)
Herbison, Miss M.


Anderson, Alexander (Motherwell)
Davies, Stephen (Merthyr)
Hewitson, Capt. M.


Anderson, Frank (Whitehaven)
de Freitas, Geoffrey
Hobson, C. R.


Attlee, Rt. Hon. C. R.
Deer, G.
Holman, P.


Awbery, S. S.
Delargy, H. J.
Holmes, Horace (Hemsworth)


Ayles, W. H.
Dodds, N. N.
Houghton, D.


Bacon, Miss Alice
Donnelly, D.
Hoy, J.


Baird, J.
Driberg, T. E. N.
Hubbard, T.


Balfour, A.
Dugdale, Rt. Hon. J. (W. Bromwich)
Hudson, James (Ealing, N.)


Barnes, Rt. Hon. A. J.
Dye, S.
Hughes, Emrys (S Ayrshire)


Bartley, P.
Ede, Rt. Hon. J. C.
Hughes, Hector (Aberdeen, N.)


Bellenger, Rt. Hon. F. J.
Edelman, M.
Hughes, Moelwyn (Islington, N.)


Benn, Wedgwood
Edwards, John (Brighouse)
Hynd, H. (Accrington)


Benson, G.
Edwards, Rt. Hon. Ness (Caerphilly)
Hynd, J. B. (Attercliffe)


Beswick, F.
Edwards, W. J. (Stepney)
Irvine, A. J. (Edge Hill)


Bevan, Rt. Hon. A. (Ebbw Vale)
Evans, Albert (Islington, S. W.)
Irving, W. J. (Wood Green)


Bing, G. H. C.
Evans, Edward (Lowestoft)
Isaacs, Rt. Hon. G. A.


Blenkinsop, A.
Evans, Stanley (Wednesbury)
Janner, B.


Blyton, W. R.
Ewart, R.
Jay, D. P. T.


Boardman, H.
Fernyhough, E.
Jeger, George (Goole)


Booth, A.
Field, Capt. W. J.
Jeger, Dr. Santo (St. Pancras, S.)


Bottomley, A. G.
Finch, H. J.
Jenkins, R. H.


Bowden, H. W.
Fletcher, Eric (Islington, E.)
Johnson, James (Rugby)


Bowles, F. G. (Nuneaton)
Follick, M.
Johnston, Douglas (Paisley)


Brook, Dryden (Halifax)
Foot, M. M.
Jones, David (Hartlepool)


Brooks, T. J. (Normanton)
Forman, J. C.
Jones, Frederick Elwyn (W. Ham, S.)


Broughton, Dr. A. D. D.
Fraser, Thomas (Hamilton)
Jones, Jack (Rotherham)


Brown, Rt. Hon. George (Belper)
Freeman, John (Watford)
Jones, William Elwyn (Conway)


Brown, Thomas (Ince)
Freeman, Peter (Newport)
Keenan, W.


Burke, W. A.
Gaitskell, Rt. Hon. H. T. N.
Kenyon, C.


Burton, Miss E.
Ganley, Mrs. C. S.
Key, Rt. Hon. C. W.


Butler, Herbert (Hackney, S.)
George, Lady Megan Lloyd
King, Dr. H. M.


Callaghan, L. J.
Gibson, C. W.
Kinghorn, Sqn. Ldr. E.


Carmichael, J.
Gilzean, A.
Kinley, J.


Castle, Mrs. B. A.
Glanville, James (Consett)
Kirkwood, Rt. Hon. D.


Champion, A. J.
Gooch, E. G.
Lang, Gordon


Chetwynd, G. R.
Gordon-Walker, Rt. Hon. P. C.
Lee, Frederick (Newton)


Clunie, J.
Greenwood, Anthony (Rossendale)
Lee, Miss Jennie (Cannock)


Cocks, F. S.
Greenwood, Rt. Hn. Arthur (Wakefield)
Lever, Harold (Cheetham)


Coldrick, W.
Grenfell, Rt. Hon. D. R.
Lever, Leslie (Ardwick)


Collick, P.
Grey, C. F.
Lewis, Arthur (West Ham, N.)


Collindridge, F.
Griffiths, David (Rother Valley)
Lewis, John (Bolton, W.)


Cook, T. F.
Griffiths, Rt. Hon. James (Llanelly)
Lindgren, G. S.


Cooper, Geoffrey (Middlesbrough, W.)
Griffiths, William (Exchange)
Lipton, Lt.-Col. M.


Cooper, John (Deptford)
Gunter, R. J.
Logan, D. G.


Corbet, Mrs. Freda (Peckham)
Hale, Joseph (Rochdale)
Longden, Fred (Small Heath)


Cove, W. G.
Hale, Leslie (Oldham, W.)
McAllister, G.


Craddock, George (Bradford, S.)
Hall, Rt. Hon. Glenvil (Colne Valley)
MacColl, J. E.


Crawley, A.
Hall, John (Gateshead, W.)
McGhee, H. G.


Crosland, C. A. R.
Hamilton, W. W.
McGovern, J.


Crossman, R. H. S.
Hardman, D. R.
McInnes, J.


Cullen, Mrs. A.
Hardy, E. A.
Mack, J. D.




McKay, John (Wallsend)
Popplewell, E.
Thomas, George (Cardiff)


Mackay, R. W. G. (Reading, N.)
Porter, G.
Thomas, Iorwerth (Rhondda, W)


McLeavy, F.
Price, Philips (Gloucestershire, W.)
Thomas, Ivor Owen (Wrekin)


MacMillan, Malcolm (Western Isles)
Proctor, W. T.
Thorneycroft, Harry (Clayton)


McNeil, Rt. Hon. H.
Pryde, D. J.
Thurtle, Ernest


MacPherson, Malcolm (Stirling)
Pursey, Cmdr. H.
Timmons, J.


Mainwaring, W. H.
Rankin, J.
Tomney, F.


Mallalieu, E. L. (Brigg)
Rees, Mrs. D.
Turner-Samuels, M.


Mallalieu, J. P. W. (Huddersfield, E.)
Reeves, J.
Ungoed-Thomas, Sir Lynn


Mann, Mrs. Jean
Reid, Thomas (Swindon)
Usborne, H.


Manuel, A. C.
Reid, William (Camlachie)
Vernon, W. F.


Marquand, Rt. Hon. H. A.
Rhodes, H.
Viant, S. P.


Mathers, Rt. Hon. G.
Richards, R.
Wallace, H. W.


Mellish, R. J.
Roberts, Rt. Hon. A.
Watkins, T. E.


Messer, F.
Roberts, Emrys (Merioneth)
Webb, Rt. Hon. M. (Bradford, C.)


Middleton, Mrs. L.
Roberts, Goronwy (Caernarvonshire)
Weitzman, D.


Mikardo, Ian.
Robertson, J. J. (Berwick)
Wells, Percy (Faversham)


Mitchison, G. R.
Robinson, Kenneth (St. Pancras. N.)
Wells, William (Walsall)


Moeran, E. W.
Rogers, George (Kensington, N.)
West, D. G.


Monslow, W.
Rose, William
Wheatley, Rt. Hon. John (Edinb'gh E.)


Moody, A. S.
Shackleton, E. A. A.
White, Mrs. Eirene (E. Flint)


Morgan, Dr. H. B.
Shawcross, Rt. Hon. Sir Hartley
White, Henry (Derbyshire, N.E.)


Morley, R.
Shinwell, Rt. Hon. E.
Whiteley, Rt. Hon. W.


Morris, Percy (Swansea, W.)
Shurmer, P. L. E.
Wigg, G.


Morrison, Rt. Hon. H. (Lewisham S.)
Silverman, Julius (Erdington)
Wilcock, Group Capt. G. A. B.


Mort, D. L.
Silverman, Sydney (Nelson)
Wilkes, L.


Moyle, A.
Simmons, C. J.
Wilkins, W. A.


Mulley, F. W.
Slater, J.
Willey, Frederick (Sunderland)


Nally, W.
Smith, Ellis (Stoke, S.)
Willey, Octavius (Cleveland)


Neal, Harold (Bolsover)
Smith, Norman (Nottingham, S.)
Williams, David (Neath)



Snow, J. W.
Williams, Rev. Llywelyn (Abertillery)


Noel-Baker, Rt. Hon. P. J.
Sorensen, R. W.
Williams, Ronald (Wigan)


Oldfield, W. H.
Soskice, Rt. Hon. Sir Frank
Williams, Rt. Hon. Thomas (Don V'lly)


Oliver, G. H.
Sparks, J. A.
Williams, W. T. (Hammersmith, S.)


Orbach, M.
Steele, T.
Wilson, Rt. Hon. Harold (Huyton)


Padley, W. E.
Stewart, Michael (Fulham, E.)
Winterbottom, Ian (Nottingham, C.)


Paget R. T.
Stokes, Rt. Hon. R. R.
Winterbottom, Richard (Brightside)


Paling, Rt. Hon. Wilfred (Dearne V'lly)
Strachey, Rt. Hon. J.
Wise, F. J.


Paling, Will T. (Dewsbury)
Strauss, Rt. Hon. George (Vauxhall)
Woodburn, Rt. Hon A.


Pannell, T. C.
Stross, Dr. Barnett
Woods, Rev. G. S.


Pargiter, G. A.
Summerskill, Rt. Hon. Edith
Wyatt, W. L.


Parker, J.
Sylvester, G. O.
Yates, V. F.


Paton, J.
Taylor, Bernard (Mansfield)
Younger, Rt. Hon. K.


Pearson, A.
Taylor, Robert (Morpeth)



Peart, T. F.
Thomas, David (Aberdare)
TELLERS FOR THE NOES:




Mr. Hannan and Mr. Royle.

6.0 p.m.

Sir J. Mellor: I beg to move, in page 24, line 27, to leave out subsections (2) and (3).
Subsection (2) creates a new crime, and I know that is rather a hobby of the present Government. The subsection contains another sinister feature which I am glad to say is unusual, but as it is undoubtedly sinister I think the Committee should give it careful examination. Subsection (2) provides that in certain circumstances His Majesty's subjects may be presumed to be guilty unless they can establish their innocence. The Committee should require the Government to state clearly why they have considered fit in this Clause to introduce such a provision which is entirely contrary to all the traditions of British justice.
Then in subsection (3) the most drastic penalties are attached. I hope the Committee will examine the terms of subsections (2) and (3) with some care.

Mr. Michael Astor: On a point of order, Mr. Touche. I am sitting very near to my hon. Friend, but it is very hard to follow the debate because of all the muttering that is going on.

The Temporary Chairman (Mr. Touche): I think we should get on much better if there were less noise.

Sir J. Mellor: Perhaps I may paraphrase the provisions of subsection (2). It provides that any person who is a party to something which is unlawful under subsection (1) shall be guilty of an offence. Then it proceeds as follows—and this is really the object of my attack:
… in any proceedings in respect of such an offence against a director"—
no doubt, the Committee will note the continuance of the vendetta which the Government are waging against directors; they delight in persecuting directors—
of the body corporate in question … (a) it shall be presumed that he was a party to


every act of that body corporate unless he proves that it was done without his consent or connivance; and (b) it shall, unless the contrary is proved, be presumed that any act which in fact amounted to or resulted in, or formed part of a series of acts which together amounted to or resulted in or would amount to or result in, something which is unlawful under subsection (1) of this section was to his knowledge such an act.
It may be possible for people to prove that they had knowledge of something, because they may be able to bring evidence or there may be some document showing that they had knowledge. But for somebody to be required, in order to establish his innocence, to prove that he did not know something, seems to me to be most difficult. It seems that in many cases it would be absolutely impossible. How can a court be satisfied that somebody did not know something? What sort of evidence can be adduced in support of such a case?
I feel that the Government must produce to this Committee some real justification for taking the astonishing course which they have taken in drafting this subsection. I know there are a few precedents for requiring persons charged with offences to establish their innocence. There are a few provisions in existing Statutes whereby people are presumed to have done something unless they can prove that they have not. But I do not think there is yet upon the Statute Book a case parallel with the contents of this subsection.
I do not think that if we searched the Statute Book we should find anything which would be so difficult to prove as for a man to prove that he had not knowledge of something. Even if the Government can produce precedents comparable with this case, it would remain none the less a very great outrage upon British justice. Very drastic penalties are attached. The punishment for an individual is up to two years' imprisonment or a fine up to £10,000, or both, and in the case of companies there are very much more severe penalties.
This proposition is particularly alarming if we have regard to the uncertainty of definition of subsection (1) which lays down what is to be deemed unlawful. All sorts of difficult questions of law and of fact are bound to arise in determining whether something unlawful has been done or not. Let me take an instance.

It is essential to any determination under subsection (1) that the question of residence and the question of control of a company should be determined.
Subsection (4), which purports to define residence, says:
A body corporate shall be deemed for the purposes of this section to be resident or not to be resident in the United Kingdom according as the central management and control of its trade or business is or is not exercised in the United Kingdom.
It is quite natural that we should look to see whether the expression "control" is defined, and in subsection (6) we see that "control" is defined as having the meaning provided in the Income Tax Act, 1945. But it says also that that definition applies to "control"
except in the expression 'central management and control.'
So that we get no further. We are left with what we can make of subsection (4).
I have given one example of the uncertainty of definition. When we have, as we have here, offences created subject to drastic penalties, investigation of which must involve a great many questions of fact and of law, the examination being based on a subsection where the offences are very vaguely defined, then I think we are going to risk doing a great deal of injustice. Surely this was quite unnecessary.
In subsection (1) certain things are declared to be unlawful, and in subsection (2) to be criminal; and further, in subsection (3) they have attached to them drastic penalties. But far the worst feature is one to which I referred—namely, laying down that a director shall be presumed to be guilty in certain circumstances unless he is able to establish his innocence.

Mr. Boyd-Carpenter: Many parts of this Clause will. I think, in practice be oppressive to the citizen, but I do not think any part is so deliberately designed to be oppressive to the citizen as the words which my hon. Friend the Member for Sutton Coldfield (Sir J. Mellor) has proposed that we should leave out. Let us consider, first, the width and vagueness of the criminal offence created by this subsection. The offence is committed if anyone, whether outside or inside the United Kingdom,
does or is a party to the doing of any act which to his knowledge amounts to or results in, or forms part of a series of acts which


together amount to or result in, or will amount to or result in something which is unlawful under subsection (1).
It is difficult to imagine words deliberately phrased wider than that, and the one safeguard which, on first reading, one might otherwise think was provided for the suspected citizen—that the act must be to his knowledge—is, of course, vitiated by the subsequent words in paragraph (b) where that knowledge is to be presumed against him if the act in question actually amounts to any of the offences laid down.
6.15 p.m.
My first protest must be against the width and vagueness of the offence, and when you recall, Mr. Touche, as my hon. Friend pointed out, that both on the vital element of knowledge and on the element of whether the gentleman in question was a party to the act the onus is placed upon him of establishing his innocence, then it is difficult to consider any act in this general context which might not be found to be an offence under the Clause. I am sure that the right hon. and learned Attorney-General will agree that in the creation of criminal offences we should seek to make it abundantly clear what is the act which is made criminal, and I do not think even he can say that there is any fairness in the description of the offence in the words I have read out.
The next aspect of the matter to which I invite the attention of the Committee is the fact that this offence is one that can be committed not only inside but outside the United Kingdom. Of course, I am aware that there are other offences where that is so—treason is one and I think bigamy is another; but it is none the less serious to make criminal by the law of England acts which are perfectly lawful in the country where they are committed, and an indefinite extension of this practice cannot but cause, at the very least, considerable inconvenience in our international relations. When the act committed is not an act which, by the ordinary understanding of humanity, is quite obviously criminal, then I think there are manifest disadvantages in extending the purview of this Clause to include acts committed anywhere in the world.
Another highly objectionable provision is one to which I will refer for a moment in passing—the presumptions raised against the accused man to which my hon.

Friend has referred. I am quite aware that there are precedents for that kind of thing, although I am inclined to doubt—and presumably the right hon. and learned Gentleman will correct me if I am wrong—whether there are precedents for paragraph (b). I want to address a few words on the general question.
In view of the right hon. and learned Gentleman's capacity to remain awake through the watches of the night, no doubt he will recall that he and I had a discussion on this issue during the Committee stage of the Gas Bill, which was perhaps the last Measure on which the Government showed as great a zeal for nocturnal legislation as they have shown in the last few days; and the right hon. and learned Gentleman will, I hope, recall that I tried then to deal with his argument that there are precedents for this shifting of responsibility upon the accused person to establish certain facts.
I think he will agree that it appeared that most of the precedents were created by this Government, no doubt in pursuit of the vendetta against directors which several hon. Members on the back benches have this afternoon admitted that the Government have pursued. The earlier precedents are precedents generally relating to the safety of the State. From the point of view of being effective precedents, I dismiss those created by this Government because in general they are provisions forced through by a party majority in pursuit of a party attitude on the question. So far as the older precedents are concerned, I think there are one or two in Statutes before the war but they relate very largely to matters affecting the security of the State. I think I am righ in saying that, although I speak without the book.
In any event, we have to consider now not whether there are precedents—and I can see that there are, although they are qualified in their effects—but whether in this business of enforcing the tax law it is right to impose this burden upon a suspected person. As the hon. Baronet has pointed out, what is a man to do when he is charged with one of these offences? In most cases all he can do is to go into the witness box and say, "I was not a party to these acts," or "I did not know that these acts were acts which might conceivably, when taken with other acts, lead to a breach of this section." That is all he can do.
But is it effective? Can the right hon. and learned Gentleman assure us that in such a case, in every such case, the man who does that will obtain a verdict of "not guilty"? I asked him such a question on the Gas Bill and, as far as I can recall those nocturnal proceedings, he was not able to give that assurance. I repeat the question this afternoon—can he assure us that a man who goes into the witness box, who stands up effectively to cross-examination, and who says what I have just suggested, will be acquitted? I personally very much doubt that and I should like to know whether the additional experience of these provisions which the Government have had since the Gas Bill has placed the right hon. and learned Gentleman in a position to give that assurance.
There is another matter—the question of the penalty. I draw particular attention to the proviso to subsection (3) where, as you will observe, Mr. Touche, the penalty in certain cases is:
The maximum amount of the fine shall be three times the total income and profits tax paid or payable by it for the last three years of assessment and the last three chargeable accounting periods ending before the commission of the offence, or ten thousand pounds, whichever is the greater.
I do not know the tax liability of Imperial Chemical Industries or Unilever, but I imagine that if any of those highly respectable organisations should be unfortunate enough to become involved in the subsection the nominal amount for which they would be liable would be millions of pounds.

Air Commodore Harvey: Even the Coal Board.

Mr. Boyd-Carpenter: My hon. and gallant Friend says, "Even the Coal Board." As this is Profits Tax, I think it was perhaps indelicate of my hon. and gallant Friend to introduce the tax on profits in connection with the Coal Board, and as the Chancellor of the Exchequer was once at the Ministry of Fuel and Power I am anxious not to hurt his feelings by raising that aspect. I am bound to say that I am also motivated by the knowledge that, if I did so, you would undoubtedly rule me out of order, Mr. Touche.
But the penalty there could really be an immense one, and it is no answer—

though I have no doubt that the Attorney-General will use it—to say that we can rely upon the courts not to impose fantastic penalties, because it is, above all, the duty of Parliament not to give legislative sanction to penalties that are fantastic. It is, therefore, a very poor argument indeed to say it is proposed to enact something so outrageous that no court of law could possibly impose it. That is rotten bad legislation.
It does seem to me that the burdens laid upon the directors of corporations, in particular, by reason of the width and vagueness of the offence created, by reason of the imposing upon them of the duty of establishing their innocence affirmatively on a number of points, by reason of the possibly immense penalties imposed, do make the words which we seek to leave out words which should never have been put into any Bill by any Government.
They amount to highly oppressive conduct on the part of the Government—conduct for which, so far at any rate, no justification has been made—and I ask the right hon. and learned Gentleman whether, while preserving, of course, the right to punish those who in any way deliberately offend against the will of Parliament, it is really beyond his capacity and that of his advisers to draft a Clause which will do that without imposing these ridiculous burdens upon that section of the community, directors of companies, who are, in my experience, neither better nor worse than the rest of us.

Mr. Hylton-Foster: It is strange indeed that the right hon. and learned Gentleman should be proposing this subsection to this Committee. He knows as well as any Member of the Committee that, if there be cases in which it is desirable to put on the subject the burden of proving his innocence before he is convicted of an offence, most certainly that is not the case when we leave the description of the offence so vague that no single lawyer in the world, if he desired to advise a client whether or no he was going to commit an offence by doing something, would be able to do it.
I ask the right hon. and learned Gentleman, if he can go back to the humble days before he was a Law Officer, to imagine himself advising a client in these circumstances—to consider that he himself would not have been able to tell a person coming to ask for his advice


whether or no he was going to commit an offence by doing "something"—an offence which would subject him, if he committed it, to these drastic penalties to which my hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) has referred.
He would have looked at the definition given in subsection (2), and he would have found that this person was going to be guilty of an offence if he did or was a party to the doing of any act which—and so on and so forth—resulted in "something which is unlawful under subsection (1)" of this Clause. I do not recall—though there may be an instance—any criminal offence being described in terms of "something." The ordinary rule of drafting, so far as I know, is to go on using the same word to refer to the same thing, and what is made unlawful by the subsection is a transaction.
Why the draftsman, when he gets to this point, calls a "transaction" by the word "something" I do not know; and if a different meaning has got to be given to "something"—something different from "transaction" which is the object prohibited—then that makes it all the more difficult for the person advising. And when we get to this "something" that the person may have done, it may be, as the Committee knows, that he may have done "something" which would "amount to or result in" a body corporate resident in the United Kingdom ceasing to be so resident.
I do not want to go over again the ground so adequately and ably covered by my hon. Friend the Member for Sutton Coldfield (Sir J. Mellor), but the point is, with respect to him, even more difficult to the adviser than he made it. At some stage in the making of adjustments in the business, in the company—at some stage—it may pass out of the "central management and control of its trade or business in the United Kingdom." Goodness knows at what stage. It may be that a change in the management of a given department may just upset the balance, so that the central management and control ceases to be here. I do not know. I do not know because it is not possible for anybody to say what "central management and control" means.
It is no good saying that it is a simple question of fact, because the question is

not simple when the statute does not define what it means; and it is worse than not defining what it means because by defining "control" as it does define it in subsection (6) of the Clause—and again, I do not want to go over the same ground—and having excepted the definition of control there given for the purpose of the phrase "the central management and control" it at once warns the adviser that "control" in the phrase "central management and control" means something other than "control" in the meaning given to it under that section of the Income Tax Act. That is the effect of excepting it, and it is very difficult to discover what "control" of a company means unless it be control within that definition in the Income Tax Act broadly to secure, in general terms, that the affairs of the company are conducted in accordance with the wishes of the controller.
Even after all this inquiry has been gone through, and the adviser has decided that he may safely advise the unfortunate individual that it is safe for him to do "something" because it will not result in the shifting of the central management and control—even then he does not know where he is, because he has go to go back to subsection (1) to find out whether the change of residence of the body corporate will indirectly result in the avoidance of liability to Income Tax or Profits Tax—that is wide enough—and he will not be able to tell his client whether or not he is committing an offence by doing this "something."
Of course, he can go to the Treasury and ask whether the doing of this "something" is embarrassing to them, but it would be extremely embarrassing to the Treasury if all those desirous of doing something, which may be this "something" which is an offence, go to them and make application for free legal advice from the Treasury, instead of getting on with the more sensible business of earning revenue in the ordinary way. We have now to add to all this appalling difficulty created for the unfortunate person who finds that he has done "something" which turns out to be a criminal offence—an offence unknown to him, as it may well be—that he is to have been presumed to have known that he was doing "something" which is prohibited by this subsection. I ask the Committee to have


nothing to do with a tyrannous subsection of this kind, and never to allow it to pass.

Mr. Glenvil Hall: We have had two remarkable speeches, one from the hon. Baronet the Member for Sutton Coldfield (Sir J. Mellor), who is, I believe, a director of companies, and another from the hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), who is a very responsible and well known member of the Bar. Listening to those two speeches one was forced to conclude either that the hon. Gentlemen were talking with their tongues in their cheeks or that they were quite ignorant of the law on this subject, which both of them, one as a director of companies and the other as a member of the Bar, should know.
Words of this kind—in fact, much stronger words than those in subsection (2, a) have appeared in Acts of Parliament for certainly the last 30 years, and everybody knows that a director is responsible for the acts committed by his company unless he can prove definitely that they were beyond his knowledge. It is a fact that, generally speaking, directors are responsible for what takes place in the companies under their control.

Mr. Boyd-Carpenter: Mr. Boyd-Carpenter rose—

6.30 p.m.

Mr. Glenvil Hall: I am sorry, but I cannot give way. I have a meeting at 6.30 which I must attend.

Air Commodore Harvey: A directors' meeting?

Mr. Boyd-Carpenter: On a point of order. When the House is in Committee is it in order for a right hon. Gentleman, having made a direct and personal reference to another hon. Member, to decline to give way to that hon. Member on the ground of an engagement outside this Chamber?

The Temporary Chairman: No hon. Member is bound to give way. It is a matter of taste.

Mr. Erroll: Further to that point of order. As it is now half-past six, should not the right hon. Gentleman go to his meeting?

Air Commodore Harvey: Late again.

Mr. Glenvil Hall: It is perfectly well known to hon. Members opposite that if an hon. Member does not wish to give way he need not do so. It is not obligatory. I would add, if I may, that I have attended these debates fairly consistently from the beginning and that my interventions have been very few—limited, in fact, to two. I therefore hope that the hon. Gentleman will acquit me of any discourtesy when I say that on this occasion, at any rate, I feel that I have no wish to give way to any interruption that may be made. I did not interrupt him when he was speaking and there is no reason why I should give way to an interruption on his part.
I was saying that provisions of this kind have appeared in Acts of Parliament for certainly the last 30 years. Many of those Acts were passed by the party opposite when in office, and I cannot see that there is any difference between a provision put into an Act for an excellent purpose such as the one for which this provision is put into this Bill by this party, and a similar provision put into Acts by the party opposite. I hope that the Committee will reject this Amendment and see that these words are retained in the Bill.

Sir William Darling: Up to now the Committee have been enlightened by the speeches of certainly two hon. and learned Members and of one right hon. Member, and it may not be inappropriate that a mere director with no legal qualifications whatsoever should intervene. I think that this is a monstrous provision, and the fact that it has been monstrous for 30 years, according to the right hon. Member for Colne Valley (Mr. Glenvil Hall), encourages me in what I have to say. Is the great party of progress not here to sweep away the monstrous iniquities of 30 years' standing?
If the argument is that this sort of provision has been put on the Statute Book by the Tory Party and the Liberal Party in years gone by, is it not then the duty of hon. Gentlemen opposite to inspire the Chancellor to do away with these ancient abuses and hideous oppressions? It seems to me that the thing is not justified because of age and tradition, and it is all the more offensive


when it is brought forward on this occasion.
I have looked at the rubric, and it says:
Restriction of certain transactions leading to avoidance of income tax or profits tax.
Was there ever such an understatement? As my hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said, the restrictions which are mildly referred to may make me liable to two years' imprisonment or a fine of £10,000. This seems to me hardly a "restriction." I cannot imagine anything more severely restrictive than penalties of that description.
I feel a certain degree of temerity and embarrassment in my present circumstances. I have hitherto—I admit, quite lightheartedly—assumed the responsibilities of director of many public companies. I thought it was my duty to help to manage the company well, and I have usually been fortunate enough, with my colleagues, to be successful in that direction. I thought that my principal duty was to my shareholders and my employees. I did not think there were any other duties beyond these.
It is that conception which has built up in this country the elaborate and extensive system of limited liability companies, which is the basis of such prosperity as it continues to enjoy. This Clause is an attack upon that class of person. Such a person may not have been all he should have been; he may have many defects and disqualifications; but up to now this well-tried system has produced a means of providing the goods and services second to none in the history of this country—

Mr. Houghton: This Clause deals with tax evasion.

Sir W. Darling: Having observed the hon. Member for some days now I have come to the opinion that he suffers from a phobia on tax evasion. It used to be his unfortunate occupation to search for tax evaders. In the opinion of some policemen the whole world is full of criminals. That seems to be the view of the hon. Gentleman on tax evaders.

Mr. Houghton: The hon. Gentleman does not disagree with having policemen, and I am sure that he will not disagree with having protection against tax evaders.

Sir W. Darling: Of course I do not object to policemen. Nor do I object to Income Tax inspectors whose practice it is to deal with tax evaders. But I do object to policemen who see the whole world as full of criminals, and I object to Income Tax inspectors who see nothing but tax evaders around them. I repeat, the hon. Member for Sowerby suffers from a phobia in this matter. I assure him that the majority of people in this country are not tax evaders, whether they are depositors in trustee savings banks or directors of companies. Perhaps the hon. Gentleman's unfortunate life in the Civil Service has persuaded him to that point of view, just as a person who is running an immoral house thinks that the whole world is made up of men who frequent these places.

Mr. Houghton: If the hon. Gentleman is linking me with immoral houses he will soon have something to withdraw.

Sir W. Darling: I did not link the hon. Gentleman with any such institution, but such is the sudden change in the colour of his complexion that I am beginning to wonder whether I might not do so.
It is important to encourage men of ability to undertake responsibilities which are within their capacity, and that is what those who are engaged in industry are doing. They are looking for directors better than themselves, and they are continually seeking to promote to their boards men who have exceptional ability. Let me put this to, shall I say, the common man—because we are not all hon. and learned; many of us are very ordinary, common men. Suppose in an engineering company, of which I have some knowledge, there is a workman, an artisan, who has a genius for contriving new devices, and suppose we want him to become a director—

Mr. Keenan: A workman become a director?

Sir W. Darling: This is a matter within my knowledge. Directors are continually searching for men of greater ability than themselves.
A man with inventive genius and skill may be coveted by the company, and to secure his continued interest they may


promote him to the board. Now if he is told that on coming on to the board he will assume the responsibilities contained in this Clause, this inventive genius will say, "No thanks. Give me £1,500 a year and the royalties upon my patent. That will suit me much better than being a director of your company." I cannot see a man who is not concerned with finance and business transactions, but is primarily a man of inventive ability and genius, wanting to assume a responsibility of that character. I hold the view that directors are wanted badly. What this country needs is 100 better businessmen than it has got. Incidentally, it also wants a hundred better politicians than it has.
If this Clause is passed, it will discourage promotion of the ordinary man to seats of responsibility. Is that the wish of His Majesty's Government? Is this Clause put forward as a device which will tend to frighten away from positions of responsibility highly skilled men? Is that the wish of the Government? Everybody with a deposit in the savings bank of more than £15 a year seems likely to come under the ban of the hon. Member for Sowerby as a person to be suspected of evading tax. This suspicion that everybody is seeking to evade taxation seems to be the whole philosophy of the Government.
The Government are making it impossible for a company to secure the services of the highly skilled artisan who wishes to rise in the world and become the director of a company. His wife will tell him not to take a job which involves the prospect of two years' penal servitude or a fine of £10,000. She will say, "Let them keep their directorship; you remain upon the bench." This Clause is making new crime and new criminals. Let us have the Communist doctrine right away, and hear it from official quarters, that "You do not want anybody to be better than yourselves"; that the Government are not prepared to recognise genius and ability. Let us hear and let us know that all this nonsense that has been talked has only been put forward for political reasons.
I feel very strongly about this. I ask hon. Members opposite to think of that great business organisation, which I admire, the Co-operative Society. How

does this Clause apply to them? It might. They have far flung activities all over this country and all over the world. They have interests in Ceylon and India and export business in the dollar areas. How does this apply to them? If the hon. Member for Sowerby was offered a post as the director of a Co-operative Society and he reported with pride to his friends that he was being made a director they might say, "My boy, two years' penal servitude for you."

Lieut.-Commander Braithwaite: I think that the Committee will agree that the hon. Member for Edinburgh, South (Sir W. Darling) did himself a grievous injustice when he described himself as an ordinary, common man. Neither of these descriptions apply to my hon. Friend, who has so enlivened the debate.
We were proceeding on pleasant, placid and constructive lines and on an extremely high level of debate prior to the intervention of the right hon. Member for Colne Valley (Mr. Glenvil Hall). He made a brief intervention and a brief visit to our proceedings. [An HON. MEMBER: "That is not fair."] It was a very brief intervention and a very brief stay. May I say, in all good temper, that it is one of the traditions of the House that when a right hon. or an hon. Member addresses us he pauses long enough after his speech to hear the opening sentences of the hon. Member who follows him. However, I understand that the right hon. Gentleman has an important engagement at one of those meetings at which hon. Members opposite discuss their grievances and distresses as the result of the leadership from which they are now suffering; but perhaps the right hon. Gentleman will be free later to hear what we have to say following his speech.
6.45 p.m.
It is always important when an ex-Financial Secretary to the Treasury takes part in our affairs. We should have liked to hear from the right hon. Gentleman far more frequently during these long discussions. I think that he told us that he had spoken only three times during the Committee stage. The previous occasions were, I think, interruptions—one sedentary and one perpendicular. This afternoon he was a little more precise in his remarks, and it is to those remarks


that I wish to say a few remarks in his absence.
His charge was that there were ample precedents for the course which the Government are now following in causing the subject to be presumed guilty until he can establish his innocence. It may not be proper to go into that at too great a length now. I imagine that it can be discussed when we come to a consequential Amendment in the name of my right hon. and learned Friend the Member for Norwich, South (Mr. H. Strauss), which seeks to expunge from the Statute Book Magna Carta. I think that the hon. Member for Rotherham (Mr. Jack Jones) wishes to say something.

Mr. Jack Jones: I was only suggesting that the hon. and gallant Gentleman should cut the cackle and get to the horses.

Lieut.-Commander Braithwaite: If the hon. Gentleman wishes to go to Ascot we are not stopping him. He will have to have a few serious words with the Patronage Secretary before he so indulges himself. I would respectfully suggest that he will find the proceedings of this Committee more congenial, less expensive and far more calculable than he will find things there. I think that it would be difficult to find anything more incalculable than the speech of the right hon. Member for Colne Valley to which I was going to reply when the hon. Gentleman expressed a desire to go to Ascot. I am sorry that he is detained. I wish him good fortune tomorrow. I can give no undertaking—

The Temporary Chairman: I think that the hon. and gallant Gentleman is getting rather wide of the Amendment.

Lieut.-Commander Braithwaite: I was merely answering the hon. Gentleman's desire to go to the races. The right hon. Member for Colne Valley stated that there were precedents for this course of action which the Government are taking. He did not give to the Committee the Statutes which he had in mind. It is quite true that there are precedents. I want to submit to the Attorney-General that they are not precedents which should carry much weight when dealing with this particular Clause. The examples which I have in front of me, and there may be others, are the Representation of the People Act, 1918, in which there is a Section dealing

with impersonation at the polls; the Dangerous Drugs Act, 1920, the Dentists Act, 1921—no doubt the hon. Member for Wolverhampton, North-East (Mr. Baird) will be familiar with that and all its Sections—and the Betting and Lotteries Act, 1934, in the debates on which some of us took part when it was going through the House.
Hon. Members who were in the House at that time will recall that there was a minority of Government supporters, of whom I was one, who strongly resisted the Clause even to the length of going into the Lobby against the Government whose general policy we were supporting at that time. We felt that it was a very serious departure from the ordinary course of justice that the onus of proof of innocence should be upon whoever was charged with an offence, and we expressed it in the Lobby at that time.
The other precedents I can find will be more familiar to hon. Members opposite for they are very recent. There is the Coal Industry Nationalisation Act, 1946, and the Electricity Act, 1947. We on these Benches feel that we ought to hold fast to the ancient British principle that a man is innocent until he is proved guilty. If only for that reason we believe Clause 32 to be thoroughly objectionable, I feel that the Attorney-General ought to apply his mind to a revision of it.

Brigadier Prior-Palmer: On a point of order. A young hurricane is travelling along these benches. Would it be possible to get in touch with the Control Room to do something about it, particularly in the absence of any hot air from the other side of the Committee?

The Temporary Chairman: I will get in touch with the Control Room.

The Attorney-General: Various aspects of this problem have been the subject of speeches by hon. Members. We are all agreed that it is a most important principle of English law that the onus is not in general on the accused to establish his innocence. That I accept at once. [HON. MEMBERS: "Hear, hear."] I see that that feeling is shared not only by the legal members of the Committee, but by every Member. Equally, it is a principle that we discussed last year on the question whether legislation should be retrospective. But I think hon. Members would agree also, and indeed it has been


stated and accepted on a previous occasion, that there are occasions when those two principles must be departed from in particular circumstances.
I seek to justify this particular Clause, which puts the onus upon the directors, by the merits of the case. Hon. Members have referred to precedents. It is important, of course, always to look to see whether there are precedents, but I never take the view that simply because there are precedents that is a justification for doing as the precedents do. Since, however, the question of precedents has been referred to, perhaps I may be allowed to say a word or two about them.
The hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) was slightly under a misapprehension when he said that he thought that the early precedents in general referred to matters dealing with the security of the State. The hon. and gallant Member for Bristol, North-West (Lieut.-Commander Braithwaite) touched upon some of the precedents. Perhaps I might deal with them a little further in order to discuss the question. No doubt the Committee would like to have an idea of how these precedents work.
I do not think it is true that they deal principally with the safety of the State. The precedent in the Representation of the People Act certainly did not. Speaking subject to correction, it was not only a matter of impersonation but advertising in favour of a candidate without authority, which might involve the people concerned establishing their innocence. The Dangerous Drugs Act is another case which obviously does not affect the safety of the State.

Mr. Boyd-Carpenter: Both those precedents put some onus on the accused person but do not place on him the duty to prove that he acted with due diligence and took all due care.

The Attorney-General: All that this Clause does is provide that
it shall be presumed that he was a party to every act of that body corporate unless he proves that it was done without his consent or connivance.

Mr. Boyd-Carpenter: "And."

The Attorney-General: That does not deal with the question of onus. It is a

slightly different problem. May I confine myself to the question of onus and draw the analogy between the two Clauses. Actually what is in the Representation of the People Act, 1922, is
'… unless he proves that the Act constituting the offence was committed without his knowledge or consent. …
These words closely correspond to those in paragraph (a). If I might pursue this question of precedents, those are old precedents—1918 in one case and 1920 in the other. The hon. Member for Kingston-upon-Thames said that he thought most of the other precedents were introduced by the present Government. Those are two old ones. Then there is the Official Secrets Act, 1920.

Mr. Boyd-Carpenter: That is the security of the State.

The Attorney-General: That is the only one.

Mr. Boyd-Carpenter: There is the Treaties of Washington Act, 1922.

The Attorney-General: Yes, those are the two. The hon. Member mentioned the Treaties of Washington Act, 1922, and there is the Theatrical Employers' Registration Act, 1925. The offence there is acting as a theatrical manager when unregistered. I do not want to take a lot of time in going through all these precedents. There is the Companies Act, 1929, and the hon. and gallant Member for Bristol, North West, referred to the Betting and Lotteries Act, 1934. Then there are the precedents in the Public Health Act, 1936. The precedents, therefore, are fairly evenly spaced out over the last 30 or 40 years. There is nothing new in them. However, I do not simply rely on the fact that there are precedents. I would seek to justify putting the onus on the directors for the following reasons.

Mr. H. Strauss: Is it not right that all the precedents that the right hon. and learned Gentleman has in mind are precedents providing that, where a company is guilty of an offence, the directors shall be presumed to be parties to that offence unless they can prove that they are not. What I am asking the right hon. and learned Gentleman is to say whether he can point to any precedent for the presumption in subsection (2) (b) which


amounts to a presumption of guilty knowledge? Is there any precedent at all for that?

The Attorney-General: I do not believe there is such a precedent, but if I may deal with that a bit later on, I will confine myself at the moment to paragraph (a). I was about to give reasons. I always take the view that in the matter of onus upon the individual one must not do it by rule of thumb, but one must look at the individual Statute and see whether the Statute is something that gives reason for putting the onus upon the individual.
If one takes this particular case, obviously the directors have an immediate responsibility for the activities of a particular company, and it is not in general right that, if the company is guilty of an offence, the directors should be entitled to shield themselves behind the company's structure and escape personal liability. In a case like this, one is not dealing with everyday transactions but with transactions which happen occasionally.
The first two paragraphs deal with transaction which generally involve a pretty substantial operation. It is not a minor operation that the transfer of shares might be, but the transactions described in paragraphs (a) and (b) are major events in the history of the company, because it involves moving the management, control and so on. That is the sort of thing which generally means a big change in the company's history. All these things do not take place without the personal cognisance and authority of the directors. It is not a case that here is something which can be done by some very humble subordinate officer of the company without the knowledge of the board. It is most unlikely that any of those events would take place without the cognisance and personal participation of the directors, as a board.
7.0 p.m.
That is the first thing. Secondly, one has this situation—[Interruption.] The position I have outlined relates to a less extent to paragraphs (c) and (d) than to paragraphs (a) and (b), but in general it would be the case that the directors were participants in the act. May I go on to give my next reasons?
One has, in general, the situation that it is extremely difficult for the prosecution

to obtain the necessary evidence to implicate a director personally. [An HON. MEMBER: "Why?"] It is difficult. No representative of the prosecution was present at the meetings of the board and none of them can tell what part each director took in the proceedings of the board. No doubt there will be the minutes but we do not know, when we look at the matter from the outside, what director was present at any meeting. All that is known is that the company has committed an offence because it has moved its management, but at that stage, almost in the nature of things, evidence cannot be obtained to implicate a particular director.
Therefore, the prosecution invariably starts at a considerable disadvantage. The knowledge is all in the minds of the directors and, from the nature of things, the knowledge at the disposal of the prosecution of the internal domestic proceedings of the company and of its board meetings is not at all complete. Therefore, there is a prima facie justification, in the view which I hold, for saying that, that being the situation from which one starts, there is no reason why a director should not be called upon to establish his innocence by simply saying that he did not know about it. The hon. Member for Kingston-upon-Thames raised the point whether it is possible for a director to show that. The hon. Baronet the Member for Sutton Coldfield (Sir J. Mellor) raised the same point. He said that it was difficult to prove a negative. I really must join issue with him on that point.
If a director goes into the box, an apparently respectable and responsible person, and says, "I did not know that this was going on," there is not the slightest reason why he should be disbelieved. It is not only not difficult for him to prove a negative but, in the ordinary course of things, it is extremely easy. If it can be put to him in cross-examination that there are letters that he has written or things which he has said to show that he was a participant, then it may be difficult for him to prove the negative, as indeed it should be. If there is nothing which gives rise to grounds for disbelieving his word, he can easily establish his innocence. He has simply to say: "I did not know."

Sir J. Mellor: Would the Attorney-General look at subsection (2, b), and see what it involves? It says:
it shall, unless the contrary is proved, be presumed that any act which in fact amounted to or resulted in, or formed part of a series of acts which together amounted to or resulted in or would amount to or result in, something which is unlawful under subsection (1) of this section was to his knowledge such an act.
In the complicated and involved situation visualised in that paragraph, it is extremely difficult for anybody to say what he did know, and still more to prove that he knew nothing at all.

The Attorney-General: Paragraph (b) does not operate until after paragraph (a). If the director did not know at all and was not a party to the act, paragraph (b) does not matter. Suppose the director had been a party to the act that formed part of a scheme to bring about this result. If we can show under paragraph (a) that he was a party to some part of the transaction, then, under paragraph (b), we presume against him, unless he can show the contrary, that he did realise that the scheme would result in the transfer of the company abroad and was designed to that end.

Sir J. Mellor: If he is a director, the Bill starts with the presumption that he was a party, and it goes on to make the further presumption that he had knowledge, unless he can prove that he had not.

The Attorney-General: Paragraph (a) presumes that he was a party unless he says: "I was not a party." Unless we can prove that what he says is untrue, there is an end of it. If he says: "I did not know about it and I did not connive at it," we do not embark upon inquiring whether he knew that that act was part of the scheme to bring about the offence. It is irrelevant, and we do not bother about it. The first thing is: Did he know about it or connive at it? If he did not, in any constituent step in the scheme, we do not bother about the rest of it.
We do so only when he is disbelieved. He says that he was not present at the board meeting when an important decision in the matter was taken. If it is shown by the production of the minutes, or whatever it is, that he was in some way a party, and that he was present at the board meeting at which the decision

was taken in regard to the transfer of the company, then it is presumed against him that he was implicated in the commission of the offence which would result in the transfer of the company. Is it putting too much of a burden upon the shoulders of a director, who is responsible for the conduct of the affairs of the company, to say that he ought not to be allowed to divest himself of that responsibility, and to ask him to answer the question: "Did you know about this?" That is all that he is required to do. I do not think that that is putting an unfair burden upon him.

Sir J. Mellor: If it can be shown that the director was present at a board meeting at which this question was decided, it is a perfectly proper deduction that he had full knowledge of what was there decided, but surely the subsection goes a great deal further than that?

The Attorney-General: The hon. Baronet's observation shows how little one is putting upon a director in putting this onus upon him. Even if this subsection were not there at all, if we did not have paragraph (a), and we were able to prove that a decision was taken at a particular board meeting and that a director was physically present at that board meeting, most people would draw the inference that he was a party to the decision. It is always possible that he was not there at the material time, or was not listening and did not realise what was happening, but at any rate that is the presumption that most sensible people would draw. When we have put the onus upon him and say, as a matter of law, "Unless you can prove the contrary it is presumed that you were a party to the decision," we are doing very little in the way of shifting the onus of proof.
Hon. Members are naturally—I do not criticise in any way—sometimes a little too nervous about these onus provisions. It is perfectly right that they should scrutinise them with very great care, and I do not complain about it. Sometimes they are a little too nervous about the effect of them. In putting the onus upon the directors we are doing very little in this particular context—but not in all contexts—beyond what the law would do in any case. We are not really making very much difference about what the position would be in this particular


context. Once we can show that a director was present at the important meeting at which a decision was taken, we presume that he was obviously a party to it.

Sir Peter Bennett: May I put a point to the right hon. and learned Gentleman?

The Attorney-General: I really must ask hon. Members to allow me to complete my speech. It is difficult to complete an argument if I keep giving way, and I have given way many times.
The Government view is that if the offence is committed it is a serious offence. It is not a trivial offence and not something which can be overlooked or excused or visited with a very slight penalty. The Government's view about that may be right or wrong—the Committee differ about it—but in commending the Clause to the Committee, I ask hon. Members to say that it should be judged upon the basis that what is designed to be prevented is something which, if it is committed, is serious and does serious harm to the State in that it does, or may result in, a very serious loss of revenue.
As my right hon. Friend said yesterday, it is because of the very serious threat to the Revenue which is held out by the possibility of repeated commission of the offences that we have introduced the Clause. We start from the position that we have here a serious offence. We are dealing with something about which the directors must know. Very rarely would they not know about it; in the ordinary circumstances they would know about it. The prosecution starts with the disadvantage which I have described. The burden on the director simply to say, "I did not know about it and did not connive in the doing of the act" is not such an onerous burden to discharge.
At the outset of my speech I accepted that this is a departure from a principle of law and said that one must watch these departures very carefully, but I commend the Clause to the Committee for the reasons that I have given and I urge the Committee to justify a departure in this case, as there have been many departures in the past, from that principle of law.

Mr. Manningham-Buller: I am glad that the right hon. and

learned Gentleman got up when he did, because it is convenient to the Committee to hear at an early stage the Government's views in support of this very novel Clause. I hope that the fact that he has risen too early does not mean that the debate on this important subject will be curtailed, because it is of advantage to hear the arguments in support of the Clause before proceeding further with the debate.
I was also glad to hear the view of the right hon. and learned Gentleman, with which I agree, that in considering whether a subsection such as this should go into the Bill one should not really have much regard for the existence of precedents. We can argue about precedents at considerable length, but the inclusion of a Clause like this must really be justified upon the circumstances which exist. The argument of the right hon. and learned Gentleman was extremely unconvincing. I am sorry to say so, but it struck me that he was finding it very difficult to convince himself that the Clause was right. In the whole of his speech he really said nothing to justify paragraph (b), and he admitted that the subsection was without any precedent.
7.15 p.m.
I shall begin by arguing on the assumption that the Clause constitutes and creates a very serious offence. The first thing that one wants our criminal law to be is clear and easily understandable. The right hon. and learned Gentleman will agree that unless the offence is clearly defined there is not much hope of getting 12 good men and true on a jury to agree on their verdict. We had an instance of that recently in a prosecution conducted by the predecessor of the right hon. and learned Gentleman.
When one examines the Clause with that in mind one begins to realise that there really is no precise definition whatsoever of the offence such as we lawyers are accustomed to. It is an unusual offence because it is only an offence to do these acts if we do not obtain Treasury consent for them. If the Treasury gives its assent to a series of acts which result in tax avoidance there is no criminal offence, but if a company inadvertently, innocently, and with no intent to avoid tax, does this same series of acts without Treasury consent the company commits a criminal offence and is liable to these most savage penalties.
Let us assume for the purposes of argument that a prosecution is launched against a director of a company for doing something forbidden by the Clause without Treasury assent. The right hon. and learned Gentleman said that it was difficult because there was no evidence in the possession of the prosecution to show that the director was a party to the decision to conduct these transactions, but a few minutes later he went on to say that all the director had to do was to say that he was not a party and he was then bound to be acquitted unless the prosecution could produce the minute book showing that he was a party. It is not difficult for the prosecution to obtain the minute book.
The argument advanced by the right hon. and learned Gentleman defeated its object. The prosecution can, in the first place, get hold of a minute book and find whether or not the accused director was present at the meeting. The argument of the right hon. and learned Gentleman did not in any way convince me of the necessity of putting on the director the onus of showing that he was not a party to the transaction.
It would be much easier for the prosecution under our criminal law if we put the onus on the defence, but that is something which we have always resisted, although in recent years we have seen in statute after statute with increasing frequency, the onus of proving guilt removed from the prosecution and the onus of proving innocence placed on the defence. We find that in statutes and under regulations.
In a matter such as this, the more the right hon. and learned Gentleman argues that the matters which constitute offences under the Clause are matters which would be bound to come within the knowledge of the board of directors, the more he defeats his argument that the onus should be put on the directors to prove non-participation, because if the matter comes before the board the easier it would be to prove non-participation by reference to the minute book.
As my hon. Friend said, the Clause is objectionable not only because it puts on a director the onus of proving that he was not a party but because it goes one stage further, a stage entirely without

precedent. Having put on the director the onus which I have just mentioned, it then puts on him the onus of proving that he has no knowledge of the transaction. As the right hon. and learned Gentleman knows, it is an extremely difficult thing to prove a negative, and yet here we have a negative to be proved on top of the other presumptions.
The right hon. and learned Gentleman sought to contend that in a criminal prosecution one would concern oneself initially with the first question and that a second one might not arise. In a criminal trial things do not work quite that way. One would have the accused going into the witness box in front of the jury, having to deal with both these matters, and being told, "Unless you can satisfy the jury you are not a party to this transaction"—and they may not be satisfied by his merely saying that he was not there and knew nothing about it—"unless you can satisfy them that you had no knowledge of it, then you are guilty of this extremely serious criminal offence."
That is quite wrong. I think there is no precedent, and the Attorney-General agrees there is no precedent, for subsection (2, b), and he has advanced no convincing argument for the inclusion of (2, a). Objections to this Clause do not stop there. There are these terrific penalties. Even assuming it is a serious offence, these penalties are almost without precedent in degree. The penalties on the individual is two years' imprisonment and possibly a fine of £10,000, or both. That will affect not only directors of private companies but of Co-operative societies. Surely mere is no precedent in Customs law or in any other branch of law for the penalty on the company. It is three times the Income Tax and Profits Tax paid.
I suggest to the right hon. and learned Gentleman that no matter how seriously he regards an offence in this class, the maximum penalties which are imposed by this Clause are savage beyond all degree. He will know that in the old days of a hundred years ago or so, when our criminal law was savage, how juries avoided convicting if they possibly could do so because they knew the nature of the penalties which followed. When one has an offence of this sort, so ill-defined and so big, created by a Socialist Government


it will not be easy for the Attorney-General to convince twelve men and true of the guilt of a person unless he amends this Clause in accordance with the suggestions we are advancing.
I am glad the right hon. and learned Gentleman intervened so soon in the debate. I believe that from his point of view this Clause would be equally effective, and indeed more effective, if he did not make this exception from the ordinary law of the land by casting the onus on the accused person and by assuming knowledge unless ignorance is proved and if, in addition, this Clause did not impose such stiff, unreasonable and unjustified maximum penalties.
I hope the Attorney-General will give serious consideration to this argument and I hope he will listen, as I am sure he will, to the arguments my hon. Friends will seek to advance on this extremely important Clause. If the Bill is to work and this Clause is to operate at all it will not operate satisfactorily if there is undue savagery as a result of Socialism.

Mr. Henry Strauss: The right hon. and learned Gentleman the Attorney-General in his exposition this afternoon presumably made clear what could be said in favour of this Clause on behalf of the Government. I want to attack very strongly certain provisions which I believe are unexampled. Indeed, the right hon. and learned Gentleman has agreed that they are unexampled. Since I want to concentrate on them and since I hope that, if hon. Members opposite think there is something in my contentions, they too may desire the Government to reconsider this Clause, I will not deal with everything that is proposed to be left out by the Amendment.
I am not going to say a word about the penalties suggested. I am simply going to attack those provisions which seem to me to involve this—that an innocent man may render himself liable. I believe that is something which hon. Members in every quarter of the Committee are deter-to avoid if they can. Since when many of us got up to speak there was an interruption from some hon. Member opposite—I do not know whether it was intended to be heard or not—to the effect that there are too many directors, let me say for my part that I am not and have never been a director of a public company.

Mr. Manuel: Never been directed.

Mr. Strauss: I am sorry I did not hear the hon. Member.

Mr. Manuel: I thought the hon. and learned Member had put it the wrong way and that he had never been directed.

Mr. Strauss: I have not been a director. What my hon. Friend the Member for Edinburgh, South (Sir W. Darling), described was not an imaginary danger. It is an actual danger. This Clause is causing many men to take legal advice. If the Clause goes through as it is at present—I am not in this sentence dealing merely with this subsection—there will be difficulty in getting men to become directors. In his brilliant speech, which I think was the first made on this Clause, my right hon. Friend the Member for Aldershot (Mr. Lyttelton) mentioned some of the great traditional reasons for which companies, wherever they might be trading in the world, thought it well to establish themselves in the City of London. He gave a list of some of the traditional advantages of the City of London. Perhaps he and the Committee will allow me to add to that list the reputation of English law and the access to British justice.
I am very sorry that the Attorney-General should be associated in any way with such a disastrous innovation as is contained in the Clause we are now considering. The whole of his defence of this Clause really consisted in a defence of the presumption in subsection (2, a). He really did not say one word in justification of subsection (2, b). Let me try to explain, in sufficiently accurate language, I think, for lawyers not to attack it but also in language, I hope, which will be clear to every man in every quarter of the Committee who wishes to avoid injustice, what is the problem with which the right hon. and learned Gentleman is seeking to deal.
That problem is this. When one makes something unlawful for a limited liability company which is an artificial person and not a real person, how is one to bring responsibility home to the actual persons who are conducting the affairs of the company? There are many and varying precedents—and I am inclined to agree


with the right hon. and learned Gentleman that one cannot confine those precedents to a very small category or a particular category—for saying that, where an act or default is made illegal for a limited liability company, where it is made criminal for a limited liability company, each director shall be deemed to be a party to the act, if that illegal act by the company is proved, unless he can establish that, in fact, he was innocent. That is dealt with in the presumption in subsection (2, a). That has so many precedents that, although we must always look very carefully at any following of that precedent, it is not that to which I wish to devote my main attack.
7.30 p.m.
What, in my submission, is unique in the Clause to which I am objecting is the combination of the vagueness of the offence laid down in the body of subsection (2), which has been dealt with already by my hon. and learned Friend the Member for York (Mr. Hylton-Foster), coupled with the disastrous presumption contained in the proviso in subsection (2, b). The right hon. and learned Gentleman said that a man need not bother about that presumption if he escapes the presumption in subsection (2, a).
I shall assume that the Attorney-General is quite right in that. Let me take this case. A director is present at a meeting—he may come in late, but he is present—at which a decision is taken to do an act which is unlawful under subsection (1). He does not fully understand the act, but he was present, and the proposal either passes without his opposing it or does not go to a vote at all. If that is the case, he quite clearly cannot rebut the presumption in subsection (2, a); that presumption clearly applies. It will be presumed that it was with his consent, that it was his act—in the words of the subsection,
it shall be presumed that he was a party …
to the act.
But what does the next presumption say? It says—and this, as far as I know, is quite without parallel in English law—that he shall be presumed to know that he was doing wrong; in the words of the subsection,

it shall, unless the contary is proved, be presumed that any act which in fact amounted to or resulted in …
something which is unlawful under subsection (1) was such an unlawful act
to his knowledge.
The presumption of guilty knowledge is an appalling step to take. The right hon. and learned Gentleman was good enough to say, with his usual candour, that this particular subsection had no precedent whatever. But how did he go on to justify it? He said that, even without it, a man might be found criminally guilty under the ordinary provisions of our law—of course he could; the right hon. and learned Gentleman is quite right in that. When it is once proved that the act was illegal and that he was party to it, the man might find the position very difficult. The court might well come to the conclusion in proper circumstances that he was fully guilty.
It is precisely because the right hon. and learned Gentleman is not willing to leave the matter to the ordinary processes of our criminal law, but considers it necessary to put in a new presumption for which there was, on his own admission, no example in our criminal law, that the thing becomes so alarming. The court is bound to conclude that Parliament has deliberately decided that this matter is not to be left to the ordinary rules of criminal justice. When the courts find that Parliament has made a deliberate change, acknowledged by the right hon. and learned Gentleman to be without precedent in our law, they are bound to conclude that it is intended that effect shall be given to that innovation. I beg the Attorney-General to bear that in mind.
There is one other point to which I should also draw his attention. These are the words of the subsection:
it shall … be presumed that any act which in fact amounted to or resulted in, or formed part of a series of acts which together amounted to or resulted in. …
Then come these astonishing words:
or would amount to or result in.
What does
would amount to or result in
mean? It does not say "is likely to amount to or result in." Those words normally mean
would amount to or result in


in certain eventualities, but those eventualities are not described. What those words
would amount to or result in
mean, I find it impossible to say.
For all those reasons, I beg the right hon. and learned Gentleman to realise the dangers of the Clause, and that, if it is passed, it will be a blot on English criminal justice. I beg him to withdraw the second presumption, and either to do without it altogether, which I think he could do, or to put something better in its place.

Mr. Lyttelton: I do not want to follow the legal argument in all its intricacies. I want hon. Members opposite to realise that the Clause would not be like this unless it were dealing with what hon. Members opposite think are an untouchable class. Directors, according to the Labour Government are "scheduled classes," which was the expression which used to be used in India.

Mr. Awbery: Something like the working classes.

Mr. Lyttelton: It is just as well to realise that industry and business do not consist of management and workers, nor is it possible to run any successful business on that basis. Industry consists of directors, management and workers, and upon the directors falls the onus of the whole policy of the company. If they get the rate of expansion wrong, if they over-expand their business upon a market which afterwards turns out to be wrong, their business is ruined. All the good that management and workers put into that particular production falls by the wayside unless the main decision is right. Success and failure begin in the board room. Hon. Members opposite must realise that they should not treat directors as if they were the "scheduled classes." They are the people upon whom falls the first decision and upon whom rests the success or failure of an undertaking. Hon. Members opposite may say what they like, but everybody knows that this is true.
When we come to the subsection in question, I should like hon. Members opposite to have in mind an alteration of its wording. What would they think about it if for the word "director" the

words "trade union official" were substituted? The subsection would then read something like this:
Any trade union official who, whether within or outside the United Kingdom, does or is a party to the doing of any act which to his knowledge amounts to or results in, or forms part of a series of acts which together amount to or result in, or will amount to or result in, something which is unlawful under subsection (1) of this section shall be guilty of an offence under this section, and in any proceedings in respect of such an offence against a trade union official of the trade union in question …
the other things will happen. If hon. Members opposite consider this change quite genuinely, they will find that the force of my criticism is correct. If such a change were made, the entire trade union movement would be in uproar if it were suggested that they were to be presumed to be guilty of offences unless they could prove that they had no knowledge of them. All these legal arguments are simply camouflage. The directorial class is considered to be a fair target for the Government, although the whole of their revenue and taxation depends in the main upon the successful decisions or otherwise taken by directors.
I should like to look at the general legal position, I have a sort of idea that no one would presume a man had committed murder until it was proved he had the intention to do so. But, of course, murderers are different and come under quite different treatment under the law than do directors, whose actions are presumed to be unlawful unless it is proved that they are not. I suggest that that is a principle which is utterly repugnant to the feelings of every hon. Member. It is only that the clearness of their judgment is clouded by the fact that here we are dealing with one of the "scheduled classes." There are, of course, other "scheduled classes" such as landlords—

Mr. Houghton: The only "scheduled classes" with which we are dealing in this Clause are tax evaders.

Mr. Lyttelton: That is like saying that the law deals only with murderers. The hon. Gentleman, whose geniality is growing since he came to the House, has spent his life among tax evaders; he thinks there are no other people. It is a terrible world in which he lived, but as he goes


on and returns I dare say that smile which sometimes spreads over his countenance will appear more often. We are not dealing only with tax evaders. The law deals with everyone, rich and poor, shareholder and director, and criminals and innocent people. The Clause does deal with tax evaders, but this subsection says that everyone who is a director is presumed to be guilty of this offence unless it is proved to the contrary, and this is a thing which

is just unacceptable. I ask my hon. Friends, unless we get other assurances, to divide against the subsection as being something which, like so much of this Finance Bill, goes far beyond the target it proposes to hit.

Question put, "That the words proposed to be left out, down to 'and' in line 33, stand part of the Clause."

The Committee divided: Ayes, 298; Noes, 284.

Division No. 132.]
AYES
[7.43 p.m.


Acland, Sir Richard
Dodds, N. N.
Hynd, H. (Accrington)


Adams, Richard
Donnelly, D.
Hynd, J. B. (Attercliffe)


Albu, A. H.
Driberg, T. E. N.
Irvine, A. J. (Edge Hill)


Allen, Arthur (Bosworth)
Dugdale, Rt. Hon. J. (W. Bromwich)
Irving, W. J. (Wood Green)


Allen, Scholefield (Crewe)
Dye, S.
Isaacs, Rt. Hon. G. A.


Anderson, Alexander (Motherwell)
Ede, Rt. Hon. J. C.
Janner, B.


Anderson, Frank (Whitehaven)
Edelman, M.
Jay, D. P. T.


Attlee, Rt. Hon. C. R.
Edwards, John (Brighouse)
Jeger, George (Goole)


Awbery, S. S.
Edwards, Rt. Hon. Hess (Caerphilly)
Jeger, Dr. Santo (St. Pancras, S.)


Ayles, W. H.
Edwards, W. J. (Stepney)
Jenkins, R. H.


Bacon, Miss Alice
Evans, Albert (Islington, S. W.)
Johnson, James (Rugby)


Baird, J.
Evans, Edward (Lowestoft)
Johnston, Douglas (Paisley)


Balfour, A.
Evans, Stanley (Wednesbury)
Jones, David (Hartlepool)


Barnes, Rt. Hon. A. J.
Ewart, R.
Jones, Frederick Elwyn (W. Ham, S.)


Bartley, P.
Fernyhough, E.
Jones, Jack (Rotherham)


Bellenger, Rt. Hon. F. J.
Field, Capt. W. J.
Jones, William Elwyn (Conway)


Bonn, Wedgwood
Finch, H. J.
Keenan, W.


Benson, G.
Fletcher, Eric (Islington, E.)
Kenyon, C.


Beswick, F.
Follick, M.
Key, Rt. Hon. C. W.


Bevan, Rt. Hon. A. (Ebbw Vale)
Foot, M. M.
King, Dr. H. M.


Bing, G. H. C.
Forman, J. C.
Kinghorn, Sqn. Ldr. E.


Blenkinsop, A.
Fraser, Thomas (Hamilton)
Kinley, J.


Blyton, W. R.
Freeman, John (Watford)
Kirkwood, Rt. Hon D.


Boardman, H.
Freeman, Peter (Newport)
Lang, Gordon


Booth, A.
Gaitskell, Rt. Hon. H. T. N.
Lee, Frederick (Newton)


Bottomley, A. G.
Ganley, Mrs. C. S.
Lee, Miss Jennie (Cannock)


Bowles, F. G. (Nuneaton)
George, Lady Megan Lloyd
Lever, Harold (Cheetham)


Brook, Dryden (Halifax)
Gibson, C. W.
Lever, Leslie (Ardwick)


Brooks, T. J. (Normanton)
Gilzean, A.
Lewis, Arthur (West Ham, N.)


Broughton, Dr. A. D. D.
Glanville, James (Consett)
Lewis, John (Bolton, W.)


Brown, Rt. Hon. George (Belper)
Gordon-Walker, Rt. Hon. P. C.
Lindgren, G. S.


Brown, Thomas (Ince)
Greenwood, Anthony (Rossendale)
Lipton, Lt.-Col. M.


Burke, W. A.
Greenwood, Rt. Hn. Arthur (Wakefield)
Logan, D. G.


Burton, Miss E.
Grenfell, Rt. Hon. D. R.
Longden, Fred (Small Heath)


Butler, Herbert (Hackney, S.)
Grey, C. F.
McAllister, G.


Carmichael, J.
Griffiths, David (Rother Valley)
MacColl, J. E.


Castle, Mrs. B. A.
Griffiths, Rt. Hon. James (Llanelly)
McGhee, H. G.


Champion, A. J.
Griffiths, William (Exchange)
McGovern, J.


Chetwynd, G. R.
Gunter, R. J.
McInnes, J.


Clunie, J.
Hale, Joseph (Rochdale)
Mack, J. D.


Cocks, F. S.
Hale, Leslie (Oldham, W.)
McKay, John (Wallsend)


Coldrick, W.
Hall, Rt. Hon. Glenvil (Colne Valley)
Mackay, R. W. G. (Reading, N.)


Collick, P.
Hall, John (Gateshead, W.)
McLeavy, F.


Collindridge, F.
Hamilton, W. W.
MacMillan, Malcolm (Western Isles)


Cook, T. F.
Hannan, W.
McNeil, Rt. Hon. H.


Cooper, Geoffrey (Middlesbrough, W.)
Hardman, D. R.
MacPherson, Malcolm (Stirling)


Cooper, John (Deptford)
Hardy, E. A.
Mainwaring, W. H.


Corbet, Mrs. Freda (Peckham)
Hargreaves, A.
Mallalieu, E. L. (Brigg)


Cove, W. G.
Hastings, S.
Mallalieu, J. P. W. (Huddersfield, E.)


Craddock, George (Bradford, S.)
Hayman, F. H.
Mann, Mrs. Jean


Crawley, A.
Henderson, Rt. Hn. Arthur (Tipton)
Manuel, A. C.


Crosland. C. A. R.
Herbison, Miss M.
Marquand, Rt. Hon. H. A.


Crossman, R. H. S.
Hewitson, Capt. M.
Mathers, Rt. Hon. G.


Cullen, Mrs. A.
Hobson, C. R.
Mellish, R. J.


Daines, P.
Holman, P.
Messer, F.


Dalton, Rt. Hon. H.
Holmes, Horace (Hemsworth)
Middleton, Mrs. L.


Darling, George (Hillsborough)
Houghton, D.
Mikardo, Ian.


Davies, A. Edward (Stoke, N.)
Hoy, J.
Mitchison, G. R.


Davies, Harold (Leek)
Hubbard, T.
Moeran, E. W.


Davies, Stephen (Merthyr)
Hudson, James (Ealing, N.)
Monslow, W.


de Freitas, Geoffrey
Hughes, Emrys (S. Ayrshire)
Moody, A. S.


Deer, G.
Hughes, Hector (Aberdeen, N.)
Morgan, Dr. H. B.


Delargy, H. J.
Hughes, Moelwyn (Islington, N.)
Morley, R.




Morris, Percy (Swansea, W.)
Robertson, J. J. (Berwick)
Vernon, W. F.


Morrison, Rt. Hon. H. (Lewisham. S.)
Rogers, George (Kensington, N.)
Viant, S. P.


Mort, D. L.
Ross, William
Wallace, H. W.


Moyle, A.
Royle, C.
Watkins, T. E.


Mulley, F. W.
Shackleton, E. A. A.
Webb, Rt. Hon. M. (Bradford, C.)


Nally, W.
Shawcross, Rt. Hon. Sir Hartley
Weitzman, D.


Neal, Harold (Bolsover)
Shinwell, Rt. Hon. E.
Wells, Percy (Faversham)


Noel-Baker, Rt. Hon. P. J.
Shurmer, P. L. E.
Wells, William (Walsall)


O'Brien, T.
Silverman, Julius (Erdington)
West, D. G.


Oldfield, W. H.
Silverman, Sydney (Nelson)
Wheatley, Rt. Hon. John (Edinb'gh E.)


Oliver, G. H.
Simmons, C. J.
While, Mrs. Eirene (E. Flint)


Orbach, M.
Slater, J.
White, Henry (Derbyshire, N.E.)


Padley, W. E.
Smith, Ellis (Stoke, S.)
Whiteley, Rt. Hon W.


Paget R. T.
Smith, Norman (Nottingham. S.)
Wigg, G.


Paling, Rt. Hon. Wilfred (Dearne V'lly)
Snow, J. W.
Wilcock, Group Capt. C. A. B.


Paling, Will T. (Dewsbury)
Sorensen, R. W.
Wilkes, L.


Pannell, T. C.
Soskice, Rt. Hon. Sir Frank
Wilkins, W. A.


Pargiter, G. A.
Sparks, J. A.
Willey, Frederick (Sunderland)


Parker, J.
Steele, T.
Willey, Octavius (Cleveland)


Paton, J.
Stewart, Michael (Fulham, E.)
Williams, David (Neath)


Pearson, A.
Stokes, Rt. Hon. R. R.
Williams, Rev. Llywelyn (Abertillery)


Peart, T. F.
Strachey, Rt. Hon. J.
Williams, Ronald (Wigan)


Popplewell, E.
Strauss, Rt. Hon. George (Vauxhall)
Williams, Rt. Hon. Thomas (Don V'lly)


Porter, G.
Stross, Dr. Barnett
Williams, W. T. (Hammersmith, S.)


Price, Philips (Gloucestershire, W.)
Sylvester, G. O.
Wilson, Rt. Hon. Harold (Huyton)


Proctor, W. T.
Taylor, Bernard (Mansfield)
Winterbottom, Ian (Nottingham, C.)


Pryde, D. J.
Taylor, Robert (Morpeth)
Winterbottom, Richard (Brightside)


Pursey, Cmdr. H.
Thomas, David (Aberdare)
Wise, F. J.


Rankin, J.
Thomas. George (Cardiff)
Woodburn, Rt. Hon. A.


Rees, Mrs. D.
Thomas, Iorwerth (Rhondda, W)
Woods, Rev. G. S.


Reeves, J.
Thomas, Ivor Owen (Wrekin)
Wyatt, W. L.


Reid, Thomas (Swindon)
Thorneycroft, Harry (Clayton)
Yates, V. F.


Reid, William (Camlachie)
Thurtle, Ernest
Younger, Rt. Hon. K.


Rhodes, H.
Timmons, J.



Richards, R.
Tomney, F.
TELLERS FOR THE AYES:


Robens, Rt. Hon. A.
Turner-Samuels, M.
Mr. Kenneth Robinson and


Roberts, Emrys (Merioneth)
Ungoed-Thomas, Sir Lynn.
Mr. Bowden.


Roberts, Goronwy (Caernarvonshire)
Usborne, H.





NOES


Aitken, W. T.
Channon, H.
Fraser, Sir Ian (Morecambe &amp; Lonsdale)


Alport, C. J. M.
Churchill, Rt. Hon. W. S.
Fyfe, Rt. Hon. Sir David Maxwell


Amery, Julian (Preston, N.)
Clarke, Col. Ralph (East Grinstead)
Gage, C. H.


Amory, Heathcoat (Tiverton)
Clarke, Brig. Terence (Portsmouth, W.)
Galbraith, Cmdr. T. D. (Pollok)


Arbuthnot, John
Clyde, J. L.
Galbraith, T. G. D. (Hillhead)


Ashton, H. (Chelmsford)
Colegate, A.
Gammans, L. D.


Assheton, Rt. Hon. R. (Blackburn, W.)
Conant, Maj. R. J. E.
Garner-Evans, E. H. (Denbigh)


Astor, Hon. M. L.
Cooper, Sqn. Ldr. Albert (Ilford, S.)
Gates, Maj. E. E.


Baker, P. A. D.
Cooper-Key, E. M.
Glyn, Sir Ralph


Baldock, Lt.-Cmdr. J. M.
Corbett, Lt.-Col. Uvedale (Ludlow)
Gomme-Duncan, Col. A.


Baldwin, A. E.
Craddock, Beresford (Spelthorne)
Gridley, Sir Arnold


Banks, Col. C.
Cranborne, Viscount
Grimond, J.


Baxter, A. B.
Crookshank, Capt. Rt. Hon. H. F. C.
Grimston, Hon. John (St. Albans)


Beamish, Maj. Tufton
Crosthwaite-Eyre, Col. O. E.
Grimston, Robert (Westbury)


Bell, R. M.
Crouch, R. F.
Harden, J. R. E.


Bennett, Sir Peter (Edgbaston)
Crowder, Capt. John (Finchley)
Hare, Hon. J. H. (Woodbridge)


Bennett, Dr. Reginald (Gosport)
Crowder, Petre (Ruislip—Northwood)
Harris, Frederic (Croydon, N.)


Bennett, William (Woodside)
Cundiff, F. W.
Harris, Reader (Heston)


Bevins, J. R. (Liverpool, Toxteth)
Cuthbert, W. N.
Harvey, Air Cdre. A. V. (Macclesfield)


Birch, Nigel
Darling, Sir William (Edinburgh, S.)
Harvey, Ian (Harrow, E.)


Bishop, F. P.
Davidson, Viscountess
Harvie-Watt, Sir George


Black, C. W.
Davies, Nigel (Epping)
Hay, John


Boles, Lt.-Col. D. C. (Wells)
de Chair, Somerset
Head, Brig. A. H.


Boothby, R.
De la Bère, R.
Headlam, Lt.-Col. Rt. Hon. Sir Cuthbert


Bossom, A. C.
Deedes, W. F.
Heald, Lionel


Boyd-Carpenter, J. A.
Digby, S. Wingfield
Heath, Edward


Boyle, Sir Edward
Dodds-Parker, A. D.
Henderson, John (Cathcart)


Bracken, Rt. Hon. B.
Donner, P. W.
Hicks-Beach, Maj. W. W.


Braine, B. R.
Douglas-Hamilton, Lord Malcolm
Higgs, J. M. C.


Braithwaite, Sir Albert (Harrow, W.)
Drayson, G. B.
Hill, Dr. Charles (Luton)


Braithwaite, Lt.-Cr. G. (Bristol, N. W.)
Drewe, C.
Hill, Mrs. E. (Wythenshawe)


Bromley-Davenport, Lt.-Col. W.
Dugdale, Maj. Sir T. (Richmond)
Hinchingbrooke, Viscount


Brooke, Henry (Hampstead)
Duncan, Capt. J. A. L.
Hirst, Geoffrey


Browne, Jack (Govan)
Dunglass, Lord
Hollis, M. C.


Buchan-Hepburn, P. G. T.
Duthie, W. S.
Holmes, Sir Stanley (Harwich)


Bullock, Capt. M.
Eccles, D. M.
Hope, Lord John


Bullus, Wing Commander E. E.
Eden, Rt. Hon. A.
Hopkinson, Henry


Burden, F. A.
Erroll, F. J.
Hornsby-Smith, Miss P.


Butcher, H. W.
Fisher, Nigel
Horsbrugh, Rt. Hon. Florence


Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)
Fort, R.
Howard, Gerald (Cambridgeshire)


Carr, Robert (Mitcham)
Foster, John
Howard, Greville (St. Ives)


Carson, Hon. E.
Fraser, Hon. Hugh (Stone)
Hudson, Sir Austin (Lewisham, N.)







Hudson, Rt. Hon. Robert (Southport)
Maudling, R.
Smyth, Brig. J. G. (Norwood)


Hudson, W. R. A. (Hull, N.)
Medlicott, Brig. F.
Snadden, W. McN.


Hurd, A. R.
Mellor, Sir John
Soames, Capt. C.


Hutchinson, Geoffrey (Ilford, N.)
Molson, A. H. E.
Spearman, A. C. M.


Hutchison, Lt.-Com, Clark (E'b'rgh W.)
Monckton, Sir Walter
Spence, H. R. (Aberdeenshire, W.)


Hutchison, Col. James (Glasgow)
Moore, Lt.-Col. Sir Thomas
Spens, Sir Patrick (Kensington, S.)


Hyde, Lt.-Col. H. M.
Morrison, John (Salisbury)
Stanley, Capt. Hon. Richard (N Fylde)


Hylton-Foster, H. B.
Morrison, Rt. Hon. W. S. (Cirencester)
Stevens, G. P.


Jeffreys, General Sir George
Mott-Radclyffe, C. E.
Stewart, Henderson (Fife, E.)


Jennings, R.
Nabarro, G.
Stoddart-Scott, Col. M.


Johnson, Howard (Kemptown)
Nicholls, Harmar
Storey, S.


Jones, A. (Hall Green)
Nicholson, G.
Strauss, Henry (Norwich, S.)


Joynson-Hicks, Hon. L. W.
Nield, Basil (Chester)
Stuart, Rt. Hon. James (Moray)


Kaberry, D.
Noble, Cmdr. A. H. P.
Summers, G. S.


Kerr, H. W. (Cambridge)
Nugent, G. R. H.
Sutcliffe, H.


Kingsmill, Lt.-Col. W. H.
Nutting, Anthony
Taylor, Charles (Eastbourne)


Lambert, Hon. G.
Oakshott, H. D.
Taylor, William (Bradford, N.)


Lancaster, Col. C. G.
Odey, G. W.
Teeling, W.


Langford-Holt, J.
O'Neill, Rt. Hon. Sir Hugh
Teevan, T. L.


Law, Rt. Hon. R. K.
Ormsby-Gore, Hon. W. D.
Thomas, J. P. L. (Hereford)


Legge-Bourke, Maj. E. A. H.
Orr, Capt. L. P. S.
Thompson, Kenneth Pugh (Walton)


Lennox-Boyd, A. T.
Orr-Ewing, Charles Ian (Hendon, N.)
Thompson, Lt.-Cmdr. R. (Croydon, W.)


Lindsay, Martin
Orr-Ewing, Ian L. (Weston-super-Mare)
Thorneycroft, Peter (Monmouth)


Linstead, H. N.
Osborne, C.
Thornton-Kemsley, Col. C. N.


Llewellyn, D.
Peake, Rt. Hon. O.
Thorp, Brig. R. A. F.


Lloyd, Rt. Hon. G. (Kings Norton)
Perkins, W. R. D.
Tilney, John


Lloyd, Maj. Guy (Renfrew, E.)
Peto, Brig. C. H. M.
Turner, H. F. L.


Lloyd, Selwyn (Wirral)
Pickthorn, K.
Turton, R. H.


Lookwood, Lt.-Col. J. C.
Pitman, I. J.
Tweedsmuir, Lady


Longden, Gilbert (Herts, S. W.)
Powell, J. Enoch
Vane, W. M. F.


Low, A. R. W.
Price, Henry (Lewisham, W.)
Vaughan-Morgan, J. K.


Lucas, Sir Jocelyn (Portsmouth, S.)
Prior-Palmer, Brig. O.
Vosper, D. F.


Lucas, P. B. (Brentford)
Profumo, J. D.
Wade, D. W.


Lucas-Tooth, Sir Hugh
Raikes, H. V.
Wakefield, Edward (Derbyshire, W.)


Lyttelton, Rt. Hon. O.
Rayner, Brig. R.
Wakefield, Sir Wavell (Marylebone)


McAdden, S. J.
Redmayne, M.
Walker-Smith, D. C.


McCorquodale, Rt. Hon. M. S.
Remnant, Hon. P.
Ward, Hon. George (Worcester)


Macdonald, Sir Peter (I. of Wight)
Renton, D. L. M.
Ward, Miss I. (Tynemouth)


Mackeson, Brig. H. R.
Roberts, Maj. Peter (Heeley)
Waterhouse, Capt. Rt. Hon. C.


McKibbin, A.
Robertson, Sir David (Caithness)
Watkinson, H.


McKie, J. H. (Galloway)
Robinson, Roland (Blackpool, S.)
Webbe, Sir H. (London &amp; Westminster)


Maclay, Hon. John
Robson-Brown, W.
White, Baker (Canterbury)


Maclean, Fitzroy
Rodgers, John (Sevenoaks)
Williams, Charles (Torquay)


MacLeod, Iain (Enfield, W.)
Roper, Sir Harold
Williams, Gerald (Tonbridge)


MacLeod, John (Ross and Cromarty)
Ropner, Col. L.
Williams, Sir Herbert (Croydon, E.)


Macmillan, Rt. Hon. Harold (Bromley)
Russell, R. S.
Wills, G.


Macpherson, Major Niall (Dumfries)
Ryder, Capt. R. E. D.
Wilson, Geoffrey (Truro)


Maitland, Cmdr. J. W.
Salter, Rt. Hon. Sir Arthur
Winterton, Rt. Hon. Earl


Manningham-Buller, R. E.
Sandys, Rt. Hon. D.
Wood, Hon. R.


Marlowe, A. A. H.
Savory, Prof. D. L.
York, C.


Marples, A. E.
Scott, Donald



Marshall, Douglas (Bodmin)
Shepherd, William
TELLERS FOR THE NOES:


Maude, Angus (Ealing, S.)
Smithers, Peter (Winchester)
Mr. Studholme and Major Wheatley.


Maude, John (Exeter)
Smithers, Sir Waldron (Orpington)

The Temporary Chairman: The next Amendment selected is that in the name of the hon. Member for Altrincham and Sale (Mr. Erroll), in page 24, line 33. With it we can discuss the following Amendment in the name of the hon. Member for Wimbledon (Mr. Black), in page 24, line 33, to leave out from "section," to the end of line 46, which is not selected.

Mr. Erroll: I beg to move, in page 24, line 33, to leave out from "section," to the end of line 46, and to insert:
(3) When any offence under subsection (1) of this section committed by a body corporate (being a body corporate which is or was resident in the United Kingdom) is proved to have been committed with the consent or connivance of, or to be attributable to any negligence on the part of any director or any

person who was purporting to act in that capacity he, as well as the body corporate, shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
This Amendment seeks to pin-point a particular aspect of the more general discussion which took place on the previous Amendment. As has already been stated, the Clause presumes the guilt of directors, and puts upon them the onus of establishing their innocence. The Clause makes some reference to penalties. That was dealt with in the discussion on the previous Amendment. The purpose of my Amendment is simply to reverse the onus of proof, and to place upon the prosecution the onus of proving the guilt of the director whereas directors are, as the Clause now stands, presumed guilty unless they can prove their innocence.
I suggest that the main purpose behind the Clause, as it is at present worded, is to secure a greater fulfilment of the penalties that might otherwise be possible. If a body corporate is found guilty it is not normally possible to imprison it, as it is only a legal fiction. However, as the subsection of the Clause dealing with penalties contains provisions for imprisonment it is necessary to proceed against the individual in order to secure the conviction which may lead to a prison sentence.
I submit that the onus of proof has been reversed solely to secure prison sentences against directors of defaulting companies, and it is because prison sentences are involved that it is so wrong to reverse the onus of proof. The financial penalties provided for may be very great, but in such cases it is usually possible for the defaulting party to pay a fine or borrow the money to pay the fine on the spot, repaying it later. But a prison sentence can fall only on the person concerned and can lead to a great and permanent stigma. It is surely vital, therefore, to the precious tradition of British justice that in cases in which possible prison sentences are involved the accused should be presumed innocent until his guilt is established.
In moving this Amendment, I have no desire whatever to shield the guilty from their just deserts but I submit that the onus of proving the innocence of an innocent party may prove too heavy a burden to be borne, and in some cases the innocent as well as the guilty may find themselves in prison. I agree fully with the argument used by the Attorney-General in the earlier discussion that there might well be cases where the reversal of the traditional onus of proof might be justified, but I should like to join issue with him on some of the pre-war examples that he quoted.
For example, in the case in which he seemed to think there was an overwhelming public interest at issue, it was not only a matter of the national interest, as in the case of the Official Secrets Act. I submit that in the case of the Dangerous Drugs Act or the Act dealing with the corruption of officials, the public interest was so overwhelming as to justify the reversal of the traditional principle of British justice.
Even in some of the smaller examples that he cited, such as the Theatrical

Employers' Registration Act, there was a certain matter of public interest which, at the time, perhaps seemed to merit the overriding of the traditional principle. I believe that that Act was originally passed in an attempt to stamp out a development of the white slave traffic which seemed to be on the increase. I believe that the insertion of the relevant Section in the Public Health Act, 1936, was done in an endeavour to stamp out the establishment of houses of ill-repute which might masquerade as nursing homes.
In all these cases there was an overwhelming moral issue of public interest. In the case of the Treaty of Washington Act, 1923, in the light of present day circumstances it merely looks slightly ludicrous that a director should be assumed guilty of building a battleship without the consent of the Government unless he could prove his innocence: as if one could obtain the steel today with which to build a battleship without the whole country knowing about it.
The Attorney-General said that it would be difficult for the prosecution to obtain evidence. It would be just as difficult for an innocent director to obtain the evidence necessary to prove his innocence; and because it is difficult for the prosecution to obtain evidence is no reason, certainly not on the basis of overriding public interest, to attempt to reverse the onus of proof.
8.0 p.m.
The Attorney-General referred a great deal to the fact that a Clause in somewhat similar terms had appeared in many Bills in the past, not only the ones he himself has chosen to cite relating to certain pre-war enactments, but also to many post-war Acts notably the nationalisation Acts, the Exchange Control Act, the Borrowing (Control and Guarantees) Act, the Atomic Energy Act and certain others. The same Clause, reversing the normal onus of proof, has appeared in no fewer than five Government Bills presented during the current Session of Parliament.
As one might expect it has become, in the Attorney-General's own words, an established precedent. But what is particularly interesting is that when the position was pointed out—the unreasonableness of the reversal of the onus of proof—during the Committee stage of certain of these Bills, the Government took


counsel once again; and in no fewer than three of the five Bills passing through Parliament in the current Session they have already withdrawn the offending Clause.
If we are to argue by precedent I suggest that here is a far better precedent, created in the year 1951, than any precedent born of the early 'twenties. I hope that the Attorney-General will ponder the fact that, if not he himself, then his colleagues in the Government are, at any rate, ready to admit the manifest injustice of placing the onus of proof on the director. All my Amendment seeks to do is to establish that, in a somewhat similar form though not precisely the same form of words, which the Government has accepted and, indeed, has taken the initiative in introducing in no fewer than three of its own Bills during the current Session.
If I may continue to argue by precedent, it may relieve hon. Members opposite to know that the Amendment, as I have tabled it, is drawn from two of the Government's own Measures, the National Insurance Acts of 1946 and 1947. If this form of words appeared good enough for the Government then surely it ought to be good enough for the Government now. I submit that the reversal of the onus of proof is only justifiable where overwhelming public interests demands that this tradition of British justice should be thrown overboard. That does not arise in this particular case. I hope that the Government will follow their own precedent and make the Finance Bill the fourth Bill in this Session from which they have deleted such an offensive subsection.

The Attorney-General: I intervene at this early stage in the debate, because, unless I very much misunderstood it, this Amendment raises precisely the same point as we discussed very fully in our last debate; namely, whether it was justifiable to place the onus of establishing their innocence on the directors. For that reason I propose to address the Committee very shortly by saying that I can do no more than repeat the arguments which I previously addressed to the Committee. If they did not commend themselves to hon. Gentlemen opposite before, they will not commend themselves any more this time.

Mr. Erroll: As an alternative might the Attorney-General not answer my argument rather than repeat his own?

The Attorney-General: I will first answer the hon. Gentleman. The first point he made was that his Amendment was taken out of an Act passed by this Government in 1946. I can answer that by saying that the formula we have adopted has been taken from Measures passed by previous Conservative Governments. But whether that really carries the matter very much further I do not know. There are many precedents for the first part but not the second part of the subsection, in Measures passed by Tory Governments in the past, such as the Public Health Act of 1936, for example. But I think that neither the point made by the hon. Gentleman nor my point, in reply, really carries the discussion much further.
The main argument of the hon. Member was that if we look at the previous precedents, they all dealt with cases in which there was some "overriding public interest"—that was the expression he used—which justified a departure from what the whole Committee agrees is the normal principle of English law about onus. If we look at the precedents I do not think they bear out what the hon. Gentleman says.
Take for example, the Theatrical Employers' Registration Act, 1925. The offence there is acting as a theatrical manager when not registered. No doubt it is in the public interest that that Act should be complied with, but one cannot really say that an over-riding public interest is there involved. It is a public interest, but nothing of such vast and pressing urgency as the hon. Gentleman seems to have in mind. I would say, on the contrary, that if we adopt as a test the test of a pressing and urgent public nature, then that test would justify putting the onus on the directors in this Bill.
The view we take, for the reasons which my right hon. Friend gave yesterday, is that of the threat of a very serious and continuing loss of revenue. In our view that reason makes it of transcending public interest that the provisions of this Clause should be complied with. If, therefore, that is the test which the hon. Gentleman thinks would justify a departure


from the normal principle, that test would justify us in so doing as I urged in the Committee on our last debate.
Beyond that I do not think I can add much to what I have said. I think the hon. Gentleman would agree that that was the main point he sought to add to the debate we have already had. That was his principal contention in the matter, and as I have said, if we look at the precedents it is not born out. In the Betting and Lotteries Act, 1934, for example, no over-riding public interest is involved, although, of course, it is to the public interest that the provisions of the Act should be complied with. But if one is trying to grade public interest and regard some public interest as being of greater urgency and some of less, then that is a case of lesser public urgency.
For this reason, and for reasons which I have given before, and which, I suggest, are as relevant to this Amendment as I hope they were to the last, I trust that the Committee will not accept the Amendment.

Sir P. Bennett: The Attorney-General has cited on previous occasions what I might almost call a hypothetical board meeting. I should like to lift the curtain and let him know that things do not happen in quite the way he suggests. This Clause has caused the greatest concern to serious directors of companies of the highest repute in the land because there is a feeling of uncertainty surrounding it.
The Attorney-General suggested, "Well, of course, at a board meeting the presence of a director would presume that he understood what was going on, and if a vote was taken he would probably have some difficulty in persuading a judge that he really had not quite understood, or had not properly heard or realised what was going on." But all meetings do not go that way. There are directors who specialise in certain matters and concentrate on certain things. There are masses of reports which have to be studied, and explained by the official or the director responsible, and the proposals are confirmed.
It is no use suggesting that a man is to blame because he did not wade through all the paper and understand all the details. One does not expect a scientific man or a highly trained engineer to

assimilate all the details of legal matters or financial matters. They are assured by people whom they trust that these things are in order and they accept that.
It is not only in business quarters that that happens. During the war I served as a temporary civil servant for five years and I can assure the Committee that the habit of skimming through reports is not confined to board meetings. I have known Ministers of the Crown skim through their reports and afterwards say, when action had been taken, "I did not know you were doing that." We have had to show them the report again and tell them they had agreed to it. As it happened, the events I am thinking of were successful and they took the credit for them. Good luck to them. But they did not remember they had agreed because they had skimmed the report. It is a habit which people develop who deal with a lot of paper and they do not apologise for it.
If it is a criminal conspiracy, as the Attorney-General suggested, if it is a deliberate plot to defraud the Revenue and a man says he did not listen particularly, we should not believe him. But this is so wide that included in it is the possibility of all sorts of things for which a director might be held responsible. A case was put to me of a company which had acquired the controlling interest in a firm overseas. That company is carrying on the habit of issuing bonus shares to its employees. That will affect the profits of the company. Are the directors to be held personally responsible for something which is going on and is in a report which they have never noticed?
I do not understand this. Even after listening to the debate, I should be in difficulty. I am certain that a number of directors I know would never trouble to read it and they would presume it was all right if their secretary or accountant or legal adviser told them so. And hanging over us directors is the possibility that if we make a mistake we may get two years' imprisonment, a £10,000 fine and lose three years of the profits of the company, which would break most of the companies I know.

Mr. Houghton: We on these benches always listen with close interest to speeches made by the hon. Member for Edgbaston (Sir P. Bennett). On matters of industrial operations and company


activity he is no doubt an authority. I doubt, however, whether the speech he has just made does justice to the sense of responsibility of directors of companies. Even if it did, may I suggest to him that any responsible board of directors has a company secretary well versed in company matters and has legal advisers whose duty it is to draw the attention of the directors to any matters upon which they might quite inadvertently go wrong?
I suggest to the hon. Gentleman that if this Clause remains part of the Bill and passes into law, it will be the duty of company secretaries or legal advisers of companies to draw the attention of directors to the four prohibitions in subsection (1). There is nothing very complicated about them, and what they are intended to do is clear.
8.15 p.m.
With the knowledge that we have of how boards of directors do their business, is it unreasonable to hold members of the board personally responsible for what the board has done? It seems to me to be quite reasonable that any director shall be held to be a party to what the board has done. Subsection (2, a), enables a director to prove that an act was done without his consent or connivance, but the assumption is that if he is a director of a company he knows what the directors have been doing and he was party to it. Paragraph (b) presumes that if he is party to what was done he must also know that what was done was unlawful. He is presumed to know that any act prohibited under this Clause was unlawful.
I do not profess to know very much about the law, but I was always taught that to plead ignorance of the law was no excuse for committing an offence. I always understood that to be an important principle of British jurisprudence, and boards of directors, with all the advice and professional assistance at their command, have no excuse for doing something unlawful and then saying, "I am sorry, but I did not know." Boards of directors are presumed to know.
The hon. Gentleman said that some directors were specialists in certain branches of the industry. Surely he would not suggest that specialist directors would be regarded as innocent of the act

of a board if, for instance, they published a false balance sheet. Directors must take their responsibilities as a whole, and although they may be specialists in production or in personnel management or in the financial operations of the company, it is the duty of the secretary and of the chairman to advise the directors by saying, "Gentlemen, on all matters of share transactions involving the disposition of shares to persons or companies overseas we have a special responsibility, and we must see that we are not guilty of an offence."
The saving clause of all, of course, is subsection (1, d, ii), which says that if the company get the consent of the Treasury to a proposed operation they have nothing more to worry about. It seems to be about as simple as ABC to ensure that directors do not inadvertently do something wrong. If hon. Members opposite suggest that boards of directors and individual directors agree to decisions or are party to decisions without even taking notice of what decisions are taken, then they are lifting the curtain on how irresponsible boards of directors can be. The difficulties of directors in keeping inside this Clause if it is passed are being grossly exaggerated, and these suggestions are not doing justice to the intelligence of directors.

Sir P. Bennett: The hon. Gentleman has confirmed all I said, namely, that directors depend entirely upon the advice given to them by the responsible officials. If they do not give them the advice and let them down, the directors can be personally responsible. That is exactly the point I was making; one is in the hands of other people.

Mr. Houghton: Are not most of us in the hands of other people when it comes to a question of observance of the law? With the complexity of the law at present, many of us have to take proper advice before embarking upon certain steps, in order to avoid some transgression. There is nothing new in that for those of us who deal with day-to-day affairs. I, as a trade union secretary, have to see that my organisation keeps within the law, and it is my duty to advise the executive committee on any matters to which their attention should be drawn. I have to go to solicitors for advice on what should be done about the transfer of property.


One has to take advice on whether a building licence is necessary in certain circumstances, or whether it is obligatory to go to the local authority for town planning permission. Are we not all dependent on professional advice? If we were not, half the hon. Gentlemen opposite would be out of work.

Mr. Bell: The hon. Member for Sowerby (Mr. Houghton) made one of his characteristic contributions, in the course of which he appeared to fail to recognise the true effect of paragraph (b) which is the kernel of the Clause to which we are objecting. The effect is not to say that the accused person must be presumed to have a knowledge of the law; it is already a matter of general rule of common law that a person cannot plead ignorance of the law.
What the paragraph does is to say that if an act has been committed which "results in or forms part of a series of acts which together amount to or result in, or will amount to or result in" the offence, then the accused person is presumed to have known about it and to have known that it formed part of a chain of other acts the total of which would result in the commission of the offence.
That is by no means the same as saying that he is presumed to know the law. What this paragraph strikes at is the man who says, "Had I realised that this act, together with a lot of other acts would constitute one of the four things mentioned in the subsection I would have known it was illegal, but I did not realise that it was one of a whole series of acts which together amounted to or resulted in, or would amount to or result in the offence." I think the hon. Member for Sowerby now appreciates the distinction between these two arguments.
In his very able speech my hon. Friend the Member for Edgbaston (Sir P. Bennett) said it was a real hardship to assume against any director that he knew that the act which had been committed was an act which, together with others, would constitute an offence under the Clause. When we had specialised directors, as we have in large companies nowadays, it is placing an extremely heavy burden on them to ask that they should be so familiar with all the transactions of the company, past and present, that

they should realise at the time that the act which the board are contemplating is one which, together with many others, would constitute the offence under the Clause. In my submission that is an unreasonable burden to place upon the technical director, and I believe that my hon. Friend has done a very valuable service in emphasising that to the Committee.
It is only the large company with specialised directors which will have available the sort of expert advice to which the hon. Member for Sowerby referred. Smaller companies, which still sometimes have foreign subsidiaries—and we cannot have too many foreign subsidiaries; we are all agreed about that—may be in even greater difficulty over the Clause. When these shifting-of-onus provisions come before us the same argument is always advanced in support of them. I do not think it is usually State security which is the argument; it is usually argued that the accused is the person in whose knowledge it peculiarly is whether he is guilty or innocent of the offence, and that it would be difficult for the prosecution to establish the case, whereas no one knows better than the accused what is the true state of affairs.
That has always appeared to me to be a thoroughly bad argument except in one or two special cases, such as the registration of theatre managers, where the offence charged is non-registration and where it would be unreasonable to place on the prosecution the burden of proving non-registration, possibly by the examination of a whole lot of registers and saying, "We have run through all the names and we cannot find his." That is unreasonable when all he has to do is to produce a certificate.
The same applies to a driving licence. Why should not a man be asked to show his driving licence, rather than that the police should have to run through the records of all the local authorities throughout the Kingdom to prove that there is no entry of his name? That is a special kind of case, and I would not resist the putting of the onus of proof on the accused in that sort of case.
The argument, however, that what has been done is within the knowledge of the accused, and that, therefore, the burden should be placed on him, is a bad and


insidious argument. I believe that there have been one or two cases in which burglars have discussed their plans with enterprising detectives who had insinuated themselves into the burglar's confidence, but it is not usual for burglars to discuss their plans with the police, and in all the cases of that character with which I have been associated—in a purely professional capacity, of course—no one has known better than the man accused—the burglar—the facts of the case. The people who know what happened are the guilty.

Mr. Houghton: There are finger prints in cases of burglary, but not at directors' meetings.

Mr. Bell: The hon. Gentleman may be successful in catching the eye of the Chair, and so be able to explain what he meant by that intervention, but I shall not attempt to deal with it in my argument.
In the ordinary class of criminal cases we have always recognised the fundamental principle of our constitution, that the burden of proof should be upon the prosecution; and in every one of those cases it is the guilty party who knows what happened and the whole truth of the matter. The innocent man does not, and it is the innocent man who is damaged by this shifting of the onus of proof. He is put at a disadvantage.
I ask the Committee to resist this provision in the Clause. I know that the argument put up for it—and the argument always put up for this sort of provision—is not put up for the first time. All Governments are somewhat inclined to favour this kind of provision because Departments of State find it more convenient to have the burden of proof placed upon the accused. Therefore, this sort of provision finds its way into Government Bills. Always the only argument put up for it is that the person who knows is guilty. That assumes his guilt, and makes no real distinction between ordinary criminal cases and this class of case.
Therefore, I ask the Attorney-General to take this provision back to his Department and consider whether really this falls into the category of the registration cases or the high public safety cases, or whether it is not, in fact, one of those legitimately included in another category. I ask him to consider this not as a party point at all, because here we are dealing with

something which goes to the basis of our constitutional law, which we are all anxious to protect. He would be making a gesture that would be much appreciated on both sides of the Committee if he were to say that he would consider this provision very carefully, if not to withdraw it, at least to give protection to men who will otherwise be put in totally unfair peril of their reputations.

Mr. Nally: It would be idle to deny that there is a point of substance raised by the hon. Gentlemen opposite in this case, but it seems to me that they have exaggerated the nature of it to the point of novelty. I remember that some little time ago I was working upon a series of feature articles dealing with large company frauds over the last century, ranging from the Bank of Scotland frauds. The extraordinary thing that I noticed was, that in every case the company directors—and these cases go back almost a century—said exactly the same thing—that they did not know. The point always brought forward by the prosecution, not unfairly, was that it was not unreasonable to suppose a person drawing a large income from a certain process over a certain time would pay a certain amount of attention to the source from which and the circumstances in which he derived the income he enjoyed.
8.30 p.m.
This principle of collective profit does, or ought to, impose upon all the people engaged in the collective enterprise, a certain responsibility. There have been many cases initiated in the court in which, quite rightly, trade union executives have been concerned. They are just as much specialists as are members of boards of directors. Some members of a trade union executive may specialise on workmen's compensation, others on the political side and others on the administrative side, but for many years there have been many precedents under which it is deemed, and rightly deemed, that an individual member of a trade union executive has full knowledge of the acts carried out in the name of the union.
I do not complain about that; it seems a very proper course of proceeding. If an individual member of a union who, quite rightly, has Conservative affiliations—we are not now arguing the merits of


that—believes that he is suffering from an injustice in relation to his trade union membership, and brings a certain type of action, it is assumed, and rightly assumed, that the executive of the union are jointly and individually responsible for what has happened. Why should that not be assumed in the case of directors?
I do not want to be offensive or quarrelsome, but there is an assumption on the part of the Opposition that a director of a company, irrespective of the gifts or background that brought him into the company, has certain special merits which have taken him ahead in the competitive field of private enterprise. Indeed, time and time again in this Committee we on this side are accused of holding back the free play of these genuine gifts and this genuine comprehensiveness of view which the average director is assumed to have.

Mr. Assheton: In the case of the trade union official which the hon. Gentleman has quoted, is he suggesting that under the present law such a trade union official is presumed guilty until he is proved innocent.

Mr. Nally: No, I was not making that point. I was saying that, since the war there have been cases concerning, say, the wrongful action of a member of a trade union executive, in which it has been assumed, quite rightly, for the purposes of legal proceedings, that all the members of the executive—depending, of course, upon the nature of the writ issued—were responsible. I agree that the two cases are not the same, but I simply make the point that in many of these matters there is a collective responsibility, whether it be in a trade union or with a board of directors. It might quite rightly be said that we are talking about criminal proceedings, although I can well imagine circumstances in which it might apply, such as in criminal libel, and so on.
Hon. Members opposite have also been a little over-anxious to stress the specialist nature of boards of directors. There is one type of director which hon. Members opposite have surely overlooked. He is the man who merely lends his name and reputation, without being either a technician or a specialist, for a handsome sum to a company because it is believed that by adding his name or

reputation, which may have been gained in another sphere, to that company, he will enhance its standard without contributing anything towards it.
One can get people to become directors of companies not because they have any special talented gifts, but because they are offered, in some cases for quite worthy motives, a sum of money every quarter or every year to associate themselves with the affairs of those companies. A man may be made the chairman of a company in order to provide, as it were, a facade of glamour and respectability to that company. If a man who knows nothing about business and technical matters accepts an income from a company, I think that it is not unreasonable for us to say he is deriving profit from lending his name to that company. We are entitled to say that he must carry part of the responsibility of that company and must be assumed to know what the company is doing.
As a journalist, I have been present at as many major criminal trials of companies as probably any one else in the Committee. Judges and juries are able to assess whether a man is a stupid stooge who has been made use of, or whether he has pleaded ignorance because he preferred to close his eyes to what the company was doing because it paid him to do so and he hoped that they would get away with it.
There is nothing unreasonable in what is proposed in this Clause, although I think that there may be a case for looking at it again to see if it might not be made even clearer in its intentions. I speak subject to the advice of the Attorney-General. I think that the purpose of the Clause and what is intended by its provisions are absolutely reasonable. On the broad argument brought forward by the Opposition, it seems to me that the Government have a perfect case, and I hope that hon. Gentlemen opposite will accept that it is not unreasonable to do what is provided for in this Clause.

Mr. John Grimston: The hon. Member for Bilston (Mr. Nally) has given an extraordinary idea of how business functions. We are told that companies pay large sums to people who know nothing about business and who have no experience of business, just for lending their names. If one lends one's name to a company, it must be worth


having. If one's name is not worth having, then surely the whole of that argument must fall down.
Let me assure the hon. Gentleman that people who are placed in that position are placed there for some reason. He says that judges are people able to distinguish between a man who is a crook and a man who is being imposed upon. All that this Amendment seeks to do is to restore the traditional position which is that a man is not presumed guilty until he has had a fair trial. As the hon. Gentleman says, judges are very well able to do that. May I draw attention to one special point because I think it is of some general application. Subsection 1 (b) makes it an offence for
the trade or business or any part of the trade or business of a body corporate so resident to be transferred from that body corporate to a person not so resident; or
The Committee will know that the bulk of our export trade is done by private enterprise. Many of the firms are extremely small and quite new to the business of exporters. They do not have the wealth of legal advice which it is assumed the large companies possess, and are quite inexpert on technical, legal points. It is those people who need to be protected in this way.
Imagine a new connection started in some foreign country with an agent in a small way. That agent is directly employed by the small company here. Supposing the business builds up to the advantage of the company and of this country, and the agent abroad points to certain advantages which will accrue to him in his own tax arrangements if he can form himself into a small company and do the trade in that way. As I see it, under this Clause the company in this country might very well be committing an offence by agreeing to that part of their trade being transferred from their own employee to a company which is resident abroad. If that is so, it is a highly technical point, which a small company might not know of and which they might easily fall into.
I add my plea to those which have been eloquently made on this side of the Committee for very deep consideration to be given to this principle, particularly now that we are so dependent on the initative

and drive of small businesses in this country, so that directors are given a fair hearing in cases such as this and are not presumed guilty before they have a chance to be heard.

Mr. Hutchinson: I listened to the speech of the hon. Member for Bilston (Mr. Nally) to find out whether he would tell the Committee how far his researches into company trials and company frauds disclose that those directors who pleaded lack of knowledge had been convicted and how far they had been acquitted. The hon. Member did not tell us that.
I have followed these cases fairly closely for the last 30 years, and my recollection is that in most of the cases, which will be well known to Members of the Committee, directors who pleaded lack of knowledge were eventually convicted. Of course, the reason is that it is not a very difficult matter to prove that a director knew or ought to have known perfectly well what was happening in his company. The speech of the hon. Member for Bilston ought to have been made against the Clause and not in favour of it, because I think it led to the conclusion that there is no great difficulty to be overcome in proving knowledge by a director.
This subsection seems to be the latest manifestation of a very disturbing feature in recent legislation, and one of the most disturbing aspects of it seems to me to be the speech of the Attorney-General. He took his stand in the main upon precedent. In other words, the more often this has been done, the more frequently it ought to be done in the future.

The Attorney-General: I am sure the hon. and learned Member does not want to misquote me, but what I said was that in my view, whatever the precedents might be, one had to justify the Clause on its own merits. I did not confine myself to precedents at all.

8.45 p.m.

Mr. Hutchinson: Of course, I accept that from the right hon. and learned Gentleman very readily, and I withdraw that comment upon his observations. I am very glad to think that the more frequently this Clause and Clauses like it are inserted in Acts of Parliament they will not be used in the future as precedents for going on doing the same thing.
I did not entirely agree with my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) when he said that in recent legislation, as well as in legislation going further back, the reason this kind of Clause was inserted was that there was some overwhelming public consideration. I agree with him that in many cases that, no doubt, was one of the factors, but I would say that a more important factor was that it is almost impossible to obtain a conviction unless the onus of proof is changed. In the majority of cases before the war, a Clause of this nature was inserted in Bills because unless it had been inserted the Bill would have been a dead letter. It would have been impossible to obtain a conviction under it at all.
That is not the case with this Bill. There is no great difficulty in proving the knowledge possessed by a director. In fact, it is quite easy to prove that he was present at certain board meetings where the decisions were taken and I see little difficulty in securing a conviction. It is very much easier for those who are concerned in these matters to dispense with the ordinary rules and to get a Clause of this nature into the Bill, but it is the duty of the Committee to protect the public against too great an infringement of the traditional burden of proof which we have followed in our courts of law for so long.
May I remind the Committee briefly of the sort of case in which a provision of this sort was regarded as not out of place in an Act of. Parliament before the war? My recollection—I am speaking from recollection—is that in the Factory Act which was passed by the Conservative Government before the war there were provisions of this nature. I remember them very clearly passing through the House, and no doubt other hon. Members who were here then will recall them too. My recollection is that these provisions were justified on the ground which I mentioned to the Committee a moment or two ago, namely, that the offences were of such a character that if the ordinary rules of evidence were applied to them it would be impossible to obtain a conviction.
I think that applied to some of the cases to which the right hon. and learned Gentleman referred, including the Housing Act, 1936. I do not remember the other

Acts, but no doubt the same considerations applied. The Government of that time never allowed this principle to be unduly extended. I recall that when the Water Act was passing through the House in 1945, a provision of this kind, altering the onus of proof, was introduced. Very strong objection was taken to it and the Government at that time accepted the criticism and withdrew the Clause.
The provision here is a matter of convenience only. I invite the right hon. and learned Gentleman, who has had long experience in the courts, to consider whether this is not a case where an alteration in our traditional methods of proof is not justified by the circumstances, where there would be no great difficulty in proving the offence in the ordinary way and where the provision is altogether unnecessary. I invite him to follow the same course as that followed by Conservative Governments and by the Coalition Government in 1945. It seems that the Government are not unwilling to follow precedents set by those Governments and so I invite the right hon. and learned Gentleman to follow this precedent and deal with the Clause as the Coalition Government dealt with a similar provision in the Water Act, 1945.

Viscount Hinchingbrooke: I do not usually intervene in even a short debate unless I have been present throughout the whole of it, but this debate embodies a well-defined principle and I think that I can speak to it without disrespect to the Committee.
This is not the first time that this issue has come up. We had it on various nationalisation Bills, notably the Iron and Steel Bill, and we went into it in some detail when that Bill was in Committee. I am not disposed to take a very tragic view about the matter. The reason the legislation is in the form that it is is largely administrative and it wears the aspect of convenience. My hon. Friend the Member for Buckinghamshire, South (Mr. Bell), was right in saying that it suits the Administration to have the thing defined in this way. I do not suppose that if and when court proceedings take place the judge and jury will be unduly disposed to be harsh to these individuals. There will be things to be said on both sides and in the end they will probably take a good honest view based upon traditional British justice.
But what is worrying is that the House of Commons, representing the people, should for so long now have been too easily acquiescent in adopting the view of the Executive, not necessarily the view of hon. and right hon. Gentlemen opposite but the view of those who have promoted and worked out in detail the Acts of Parliament which we have been passing for five or six years. It suits the bureaucracy and the Executive—and not necessarily right hon. Gentlemen opposite, who take a political view of affairs and are steeped in British traditions, to have the thing framed in this way. I earnestly hope that we are now arriving at a position where we can stop the rot and redress it and go back to what has always been the basic principle of British justice, that a man shall be deemed to be innocent until he is proved to be guilty.
I do not see why we should not start with directors. My right hon. Friend the Member for Aldershot (Mr. Lyttelton) was absolutely right in saying that they are vital to British industry at the present time, and I do not think that even the prejudice of hon. Members opposite can overcome the facts of the case as they are being slowly realised week by week and month by month by all who are vitally concerned in the recovery of British trade and the flowering of our export trade.
The hon. Member for Bilston (Mr. Nally) was disposed to be extremely hostile to directors in general and one sort of director in particular. I cannot find very much fault in what he said about a stooge director or a sleeping partner who merely gives his name to an enterprising concern and gets a fee in reward. I quite agree that there is not much to be said for that type of man but, having said that, cannot the hon. Gentleman admit that there are working directors now who are of vital consequence to all these companies as they go about their business of re-establishing the trading position of Britain and of our export enterprise? As my right hon. Friend said, they are, equally with managers, trade union officials and workpeople, vital to the enterprising industry of this country.

Mr. Nally: I probably put it clumsily, but the noble Lord must not misunderstand me. It was no part of my argument that the majority of directors, certainly

in the smaller companies, are not specialists, especially if they are engaged in a certain kind of business. I accept that readily. I was simply making the case that if they be all the noble Lord is saying they are, vital to the export drive, playing an important part in business—which I accept—then equally, being that sort of person, they must have a broad knowledge of what their company is doing, why it is doing it and, if their company is doing that which is mischievous or criminal in effect, they must accept responsibility on precisely the grounds of praise that the noble Lord is giving them.

Viscount Hinchingbrooke: But knowledge is not the test. The test of this Clause is whether they have committed an illegal act in effect. The principle we are discussing is whether they are to be deemed guilty of an illegal act or deemed innocent until proved by the courts to be guilty. The situation is no different whether it be directors or anybody else. It is only a slight remaining prejudice on the part of right hon. and hon. Gentlemen opposite against directors which prevents them from reversing this principle now.
It may well be the case that, in the next five years when the Conservative Party are in power, for various reasons we may be obliged to undertake some legislation affecting trade unions. There may be an undue amount of breakaway strikes—

The Chairman: The Chairman rose—

Viscount Hinchingbrooke: Very well, Sir. May I say by way of brief illustration that I should have thought the last thing the Conservative Party would ever do would be to put into legislation affecting trade unions this principle of assuming them to be guilty before being proved innocent. If right hon. Gentlemen opposite would only realise that all sorts of persons in future legislation may have to be named as a class, they would be more apt to get over their prejudice on this matter and agree that we are right to re-adopt the traditional British view of a man being deemed innocent until proved guilty.
The right hon. and learned Gentleman, who has put up such a remarkably tough and forthright performance in the last few days, would, I should have thought, been


one of the first to stand up against the bureaucratic view that it is more convenient to have the legislation in this way. After all, he has had a profound legal training and he might have found it possible in the last few weeks, when he saw the draft of this legislation, to say, "No, I realise it is convenient from the point of view of the bureaucracy and the Executive, but I do not propose to have it in that form because it is fundamentally wrong and false."

9.0 p.m.

Mr. Erroll: I think that the answer of the Attorney-General to my remarks is most unsatisfactory, but now, of course, he has heard the supporting remarks of my hon. Friends and I hope that he will turn the matter over in his mind, as the Government have done in respect of similar Clauses in other Bills. As we divided on a question of similar principle on the earlier Amendment. I do not seek to waste the time of the Committee by calling for a further Division. I therefore beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Colegate: I beg to move, in page 25, line 6, to leave out from second "tax," to "or," in line 8, and to insert:
which has been avoided by the unlawful transactions.
This is a narrow point and I need not occupy very much of the Committee's time, but it is a very important point. The words that I propose should be left out are typical of the whole of the Clause, which is conceived in terms of savagery, of presumption of guilt, and in other ways offending, in our opinion and in the opinion of many other people, against what we commonly call "fair play."
It must be remembered that the offences created under the Bill are mainly offences of failing to obtain Treasury permission. We are not dealing now with serious crimes of personal violence and so on, but with crimes—"offences" would be a better word—which have been created by the failure to obtain Treasury consent. In the present Clause we find exactly the same spirit, with penalties bearing no relation whatever to the crime and which are merely shoved in on a savage scale which, I venture to think, has rarely been adopted in an Act of

Parliament. If we were dealing with some violent murderer or frightful crime against human life, we could not expect, so far as monetary penalties were concerned, anything more savage than this provision.
I am asking that the punishment should be related to the crime; that if a man makes an undue profit of £1,000 by disregarding the necessity for obtaining Treasury consent, not merely should the £1,000 be taken from him but that he should be fined the substantial sum of £3,000 against the profit that he has illegally made. Consider the wording of the Clause. If a company with an annual income of perhaps, £500,000 a year commits some trivial offence under the Clause and a man makes an illegal profit of a few hundred pounds, he can be fined, as I understand it, £1,500,000 for that particular offence; that is provided as the maximum penalty. We all know that a penalty of this kind is a maximum and need not be imposed, but naturally, if we suggest gigantic penalties of this nature, we are in effect giving a lead to the courts to inflict outrageous fines.
Just as I believe that certain other unjust sections of the Clause will lead juries to fail to convict a person, so when they read this type of provision—and defending Counsel would naturally point out that if a man had made £1,000 profit, a fine of some £1,500,000 could be imposed upon him—the jury would regard this as savage, old-fashioned legislation, and might say, "We thought this type of legislation had been done away with when we abolished hanging for sheep-stealing. We cannot convict under such an Act which may impose such a monstrous penalty."
The Attorney-General may reply, as he has replied so often today, that of course that would not be so, that the courts are so pleasant and the Treasury is a charming body. He himself is so charming and persuasive that at times I feel almost inclined to let the matter go, but when I remember that it is not the Attorney-General who has to decide these questions but a court of law, which may not have heard the debate and is not bound by anything the Attorney-General says, I remember that it will go to the words of the Statute. It will say either "This is a monstrous penalty and we cannot convict," or those concerned will feel that they ought to inflict very heavy


penalties, because that is the suggestion of the Clause.
I appeal to the Attorney-General. He has a difficult Clause and we can see that he feels that in many respects this Clause is too savage and too out of touch with modern opinion of punishment and legislation against crimes. These are not serious crimes in one sense of the word, but are crimes created by an edict of the Government that one must obtain Treasury permission in this, that and many other transactions of business. I think I am right in saying that the largest profit made is some £25 million, and so the maximum penalty under this Clause in the case of a certain company would be £75 million. I suggest the Clause is ridiculous and makes the Government look foolish. I suggest they should put in a fine based on three times the amount of illegal profit made by the wrongdoer who has been prosecuted.

The Attorney-General: I think that the Amendment proceeds upon somewhat of a misconception. The words the hon. Member would seek to insert are
which has been avoided by the unlawful transactions.
Supposing there is a case, for example, within subsection (2, a) of a company which goes abroad and carries on an undertaking abroad for a number of years. The tax which is avoided, and which the Amendment would make the measure of the fine, is the tax which thereafter it avoids having to pay to the British Revenue. In other words, it goes abroad, say next year, and earns £1 million or half a million pounds. If it were in England, it would be liable to pay Income Tax and Profits Tax upon that half million pounds, or one million pounds, of profit, and the following year the same, and that would go on as long as the company continued business.
In each year the result of its going abroad may mean it will have avoided having to pay a sum for tax. The hon. Member was concerned as to the heavy penalty in the Clause as it stands; but his Amendment would make the penalty a great deal heavier. The Clause provides that the fine shall be related to the maximum income of the last three years, that is to say, the three years which have gone by, but the Amendment would mean the

maximum the company may have to pay by way of fine would be the maximum amount of tax which it would avoid paying for each year after it went abroad; and that might be an enormous amount of money.

Mr. Colegate: If the company has gone abroad and is losing three times a year what it saves per year, that company obviously will not last more than a year or two. The suggestion is quite ludicrous.

The Attorney-General: I do not think I have made myself clear. The effect of the Amendment would be that it would have to pay by way of a fine three times the tax which, by going abroad, it avoids having to pay in this country. By going abroad it escapes liability to pay tax in this country. It makes a profit, and on that profit it avoids having to pay tax to the United Kingdom Inland Revenue. It may be taxable abroad, but it is not taxable here. Each year, according to the words of the Amendment, the tax
which has been avoided by the unlawful transaction
is the tax in which in each of the coming years it avoids having to pay to the United Kingdom Revenue.
In other words, supposing that the concern carried on its undertaking for the next 50 years it would in each year avoid having to pay a sum in taxation to the United Kingdom Revenue—unless it made a loss—and by the terms of the Amendment it would become liable each year—in the example I have given, for the next 50 years—to pay a fine which equals the total of three times the amount of tax that it would avoid having to pay to the United Kingdom Revenue. The effect of the Amendment is to make the penalty infinitely greater.
Quite apart from that consideration, it is impossible to impose a penalty of that kind. We cannot tell what the tax will be. Supposing the company goes abroad next year and, by so doing, commits an offence, and a prosecution results towards the end of next year. If the court were required to assess the penalty in terms of the proposed Amendment it would have to try to make a guess as to what would be the tax that the company was likely to save so long as it carried on its undertaking abroad.
The hon. Member will realise that it is impossible to expect a court to make an


estimate of that sort; it has not the materials on which it could begin to attempt to make such an estimate. If it did attempt to make a guess and had before it a prosperous company, solid and well established, as to which the indications were that there was every likelihood that it would continue carrying on its undertaking abroad for many decades and would continue to prosper and expand its undertaking, the estimate of the tax that it would save, and accordingly the estimate of the penalty based on three times the amount of that tax, would be colossal, much greater than the penalty which the Clause at present provides.

Mr. Colegate: The Attorney-General knows very well that he is taking a hypothetical case which does not really apply, and that unless a company has left behind in this country considerable assets neither the penalty of the Attorney-General nor the one I propose will be applied. He has taken a purely hypothetical case.

The Attorney-General: I really have not taken a hypothetical case. I am not trying to give a merely specious reply; I really mean what I said. The effect of the Amendment is that a company would be fined by reference to its future history instead of by reference to its past history, as the only tax evaded by the unlawful transactions is the tax which in the years that stretch into the future it would have had to pay had it remained here but which, by going abroad, it does not have to pay.

Mr. Manningham-Buller: We have had considerable discussion already covering this point, and I do not think it will be necessary for the Committee to spend very long on it; but there are one or two observations which I should like to make in reply to the arguments advanced by the Attorney-General. The point which my hon. Friend the Member for Burton (Mr. Colegate) sought to make was a perfectly clear and valid one, namely, that the maximum penalty imposed by the Clause as it stands is out of all reason and completely unjustified. Indeed, if the maximum penalty were imposed it might, and probably would, lead to the liquidation of vast concerns and to unemployment for large numbers of people.
9.15 p.m.
That was the point of my hon. Friend's Amendment. He pointed out that the effect of three times the total Income Tax and Profits Tax paid for the last three years of assessment was the maximum penalty. It might well run into six figures. It might well necessitate the liquidation of the whole concern and cause unemployment for all those engaged therein. That is the maximum penalty and the point put by my hon. Friend is that it is far too much. The maximum fine is stated to be £10,000, but if the right hon. and learned Gentleman will read on he will see it states, "whichever is the greater" and three times the Income Tax and Profits Tax for the last three-years could be a very much greater figure.
The right hon. and learned Gentleman has advanced no argument in favour of retaining such a high maximum. All he has sought to do is to try to indicate, taking just one illustration, that the result of the Amendment moved by my hon. Friend would be contrary to his desire. The right hon. and learned Gentleman gave the illustration of a company which ceases to be resident in this country, but as he realises full well, a great many offences might be effected under this Clause without the company ceasing to be resident in this country; and in a great many cases the difficulties which he envisaged of calculating the Income Tax and Profits Tax would not exist at all.
That is the real fallacy in the argument of the right hon. and learned Gentleman. He based his argument only on an offence created by this transfer of residence of the company. In the vast majority of cases no difficulty would be found in calculating the amount of tax avoided or the amount by which tax liability is reduced in consequence of transactions covered by (b), (c) or (d) of subsection (1).
We have done our best to indicate to the right hon. and learned Gentleman our dissatisfaction with this draconian penalty. I do not think the right hon. and learned Gentleman has quoted a single instance of a similar penalty of this character in any preceding Statute. Having advanced our argument to the best of our ability without apparently making any impression on him,


we have no alternative but to try to effect an impression upon him in the Division Lobbies.

Mr. John Lewis: I am surprised at the suggestion by the hon. and learned Member for Northants, South (Mr. Manningham-Buller) that this sort of thing had never happened before. Cannot he recall during the war—

Mr. Manningham-Buller: May I help the hon. Gentleman? I did not say that I had never heard of this sort of thing happening before. I asked for a precedent for this sort of penalty.

Mr. Lewis: I was about to give one to the hon. and learned Gentleman if he will control himself and have a little patience. Does not the hon. and learned Gentleman recall that during the years of the war legislation was introduced, in order that there should be a quota system, by the Government of which the right hon. Member for Woodford (Mr. Churchill) was the head? In fact, certain multiple firms which exceeded their quota, due to complications of their industrial organisation and

without the knowledge of their directors, were fined £80,000 to £100,000. For a contravention of the Customs and Excise regulations, smuggling for example, the penalty is very heavy indeed. If there is a contravention of the regulations under this particular Clause, I see no reason why right hon. and hon. Members opposite should object to there being proper penalties to deal with it.

Brigadier Rayner: Since I have not heard much of the discussion on this Amendment I shall say no more than that I cannot agree that the Attorney-General made his case for the real severity of this punishment. If I did not feel he was rather better off than I am, I would send him two tickets for the Savoy Theatre for the performance of "The Mikado" so that he might listen to that classic song which contains the words "To make the punishment fit the crime." Here the punishment does not fit the crime and the right hon. and learned Gentleman has made no case for it at all.

Question put, "That the words proposed to be left out stand part of the Clause."

The Committee divided: Ayes, 298; Noes, 281.

Division No. 133.]
AYES
[9.21 p.m.


Acland, Sir Richard
Carmichael, J.
Edwards, John (Brighouse)


Adams, Richard
Castle, Mrs. B. A.
Edwards, Rt. Hon. Ness (Caerphilly)


Albu, A. H.
Champion, A. J.
Edwards, W. J. (Stepney)


Allen, Arthur (Bosworth)
Chetwynd, G. R.
Evans, Albert (Islington, S. W.)


Allen, Scholefield (Crewe)
Clunie, J.
Evans, Edward (Lowestoft)


Anderson, Alexander (Motherwell)
Cocks, F. S.
Evans, Stanley (Wednesbury)


Anderson, Frank (Whitehaven)
Coldrick, W.
Ewart, R.


Attlee, Rt. Hon. C. R.
Collick, P.
Fernyhough, E.


Awbery, S. S.
Collindridge, F.
Field, Capt. W. J.


Ayles, W. H.
Cook, T. F.
Finch, H. J.


Bacon, Miss Alice
Cooper, Geoffrey (Middlesbrough, W.)
Fletcher, Eric (Islington, E.)


Baird, J.
Cooper, John (Deptford)
Follick, M.


Balfour, A.
Corbet, Mrs. Freda (Peckham)
Foot, M. M.


Barnes, Rt. Hon. A. J.
Cove, W. G.
Forman, J. C.


Bartley, P.
Craddock, George (Bradford, S.)
Fraser, Thomas (Hamilton)


Bellenger, Rt. Hon. F. J.
Crawley, A.
Freeman, John (Watford)


Benn, Wedgwood
Crosland, C. A. R.
Gaitskell, Rt. Hon. H. T. N.


Benson, G.
Crossman, R. H. S.
Ganley, Mrs. C. S.


Beswick, F.
Cullen, Mrs. A.
George, Lady Megan Lloyd


Bevan, Rt. Hon. A. (Ebbw Vale)
Daines, P.
Gibson, C. W.


Bing, G. H. C.
Dalton, Rt. Hon. H.
Gilzean, A.


Blenkinsop, A.
Darling, George (Hillsborough)
Glanville, James (Consett)


Blyton, W. R.
Davies, A. Edward (Stoke, N.)
Gordon-Walker, Rt. Hon. P. C.


Boardman, H.
Davies, Rt. Hon. Clement (Montgomery)
Granville, Edgar (Eye)


Booth, A.
Davies, Harold (Leek)
Greenwood, Anthony (Rossendale)


Bottomley, A. G.
Davies, Stephen (Merthyr)
Greenwood, Rt. Hn. Arthur (Wakefield)


Bowden, H. W.
de Freitas, Geoffrey
Grenfell, Rt. Hon. D. R.


Bowles, F. G. (Nuneaton)
Deer, G.
Grey, C. F.


Brook, Dryden (Halifax)
Delargy, H. J.
Griffiths, David (Rother Valley)


Brooks, T. J. (Normanton)
Dodds, N. N.
Griffiths, Rt. Hon James (Llanelly)


Broughton, Dr. A. D. D.
Donnelly, D.
Grimond, J.


Brown, Rt. Hon. George (Belper)
Driberg, T. E. N.
Gunter, R. J.


Brown, Thomas (Ince)
Dugdale, Rt. Hon. J. (W. Bromwich)
Hale, Joseph (Rochdale)


Burke, W. A.
Dye, S.
Hale, Leslie (Oldham, W.)


Burton, Miss E.
Ede, Rt. Hon. J. C.
Hall, Rt. Hon. Glenvil (Colne Valley)


Butler, Herbert (Hackney, S.)
Edelman, M.
Hall, John (Gateshead, W.)




Hamilton, W. W.
MacPherson, Malcolm (Stirling)
Silverman, Julius (Erdington)


Hannan, W.
Mainwaring, W. H.
Simmons, C. J.


Hardy, E. A.
Mallalieu, E. L. (Brigg)
Slater, J.


Hargreaves, A.
Mallalieu, J. P. W. (Huddersfield, E.)
Smith, Ellis (Stoke, S.)


Hastings, S.
Mann, Mrs. Jean
Smith, Norman (Nottingham, S.)


Hayman, F. H.
Manuel, A. C.
Snow, J. W.


Henderson, Rt. Hn. Arthur (Tipton)
Marquand, Rt. Hon. H. A.
Sorensen, R. W.


Herbison, Miss M.
Mathers, Rt. Hon. G.
Soskice, Rt. Hon. Sir Frank


Hewitson, Capt. M.
Mellish, R. J.
Steele, T.


Hobson, C. R.
Messer, F.
Stewart, Michael (Fulham, E.)


Holman, P.
Middleton, Mrs. L.
Stokes, Rt. Hon. R. R.


Holmes, Horace (Hemsworth)
Mikardo, Ian.
Strachey, Rt. Hon. J.


Houghton, D.
Mitchison, G. R.
Strauss, Rt. Hon. George (Vauxhall)


Hoy, J.
Moeran, E. W.
Stross, Dr. Barnett


Hubbard, T.
Monslow, W.
Sylvester, G. O.


Hudson, James (Eating, N.)
Moody, A. S.
Taylor, Bernard (Mansfield)


Hughes, Emrys (S. Ayrshire)
Morgan, Dr. H. B.
Taylor, Robert (Morpeth)


Hughes, Hector (Aberdeen, N.)
Morley, R.
Thomas, David (Aberdare)


Hynd, H. (Accrington)
Morris, Percy (Swansea, W.)
Thomas, George (Cardiff)


Hynd, J. B. (Attercliffe)
Morrison, Rt. Hon H. (Lewisham, S.)
Thomas, Iorwerth (Rhondda, W.)


Irvine, A. J. (Edge Hill)
Mort, D. L.
Thomas, Ivor Owen (Wrekin)


Irving, W. J. (Wood Green)
Moyle, A.
Thorneycroft, Harry (Clayton)


Isaacs, Rt. Hon. G. A.
Mulley, F. W.
Thurtle, Ernest


Janner, B.
Nally, W.
Timmons, J.


Jay, D. P. T.
Neal, Harold (Bolsover)
Tomney, F.


Jeger, George (Goole)
Noel-Baker, Rt. Hon. P. J.
Turner-Samuels, M.


Jeger, Dr. Santo (St. Pancras, S.)
O'Brien, T.
Ungoed-Thomas, Sir Lynn.


Jenkins, R. H.
Oldfield, W. H.
Usborne, H.


Johnson, James (Rugby)
Oliver, G. H.
Vernon, W. F.


Johnston, Douglas (Paisley)
Orbach, M.
Viant, S. P.


Jones, David (Hartlepool)
Padley, W. E.
Wade, D. W.


Jones, Frederick Elwyn (W. Ham, S.)
Paget R. T.
Wallace, H. W.


Jones, Jack (Rotherham)
Paling, Rt. Hon. Wilfred (Dearne V'lly)
Watkins, T. E.


Jones, William Elwyn (Conway)
Paling, Will T. (Dewsbury)
Webb, Rt. Hon. M. (Bradford, C.)


Keenan, W.
Pannell, T. C.
Weitzman, D.


Kenyon, C.
Pargiter, G. A.
Wells, Percy (Faversham)


Key, Rt. Hon. C. W.
Parker, J.
Wells, William (Walsall)


King, Dr. H. M.
Paton, J.
West, D. G.


Kinghorn, Sqn. Ldr. E.
Peart, T. F.
Wheatley, Rt. Hon. John (Edinb'gh E.)


Kinley, J.
Popplewell, E.
White, Mrs. Eirene (E. Flint)


Kirkwood, Rt. Hon. D.
Porter, G.
While, Henry (Derbyshire, N.E.)


Lang, Gordon
Price, Philips (Gloucestershire, W)
Whiteley, Rt. Hon. W.


Lee, Frederick (Newton)
Proctor, W. T.
Wigg, G.


Lee, Miss Jennie (Cannock)
Pryde, D. J.
Wilcock, Group Capt. C. A. B.


Lever, Harold (Cheetham)
Pursey, Cmdr. H.
Wilkes, L.


Lever, Leslie (Ardwick)
Rankin, J.
Wilkins, W. A.


Lewis, Arthur (West Ham, N.)
Rees, Mrs. D.
Willey, Frederick (Sunderland)


Lewis, John (Bolton, W.)
Reeves, J.
Willey, Octavius (Cleveland)


Lindgren, G. S.
Reid, Thomas (Swindon)
Williams, David (Neath)


Lipton, Lt.-Col. M.
Reid, William (Camlachie)
Williams, Rev. Llywelyn (Abertillery)


Logan, D. G.
Rhodes, H.
Williams, Ronald (Wigan)


Longden, Fred (Small Heath)
Richards, R.
Williams, Rt. Hon. Thomas (Don V'lly)


McAllister, G.
Robens, Rt. Hon. A.
Williams, W. T. (Hammersmith, S.)


MacColl, J. E.
Roberts, Emrys (Merioneth)
Wilson, Rt. Hon. Harold (Huyton)


Macdonald, A. J. F. (Roxburgh)
Roberts, Goronwy (Caernarvonshire)
Winterbottom, Ian (Nottingham, C.)


McGhee, H. G.
Robertson, J. J. (Berwick)
Winterbottom, Richard (Brightside)


McGovern, J.
Robinson, Kenneth (St. Pancras, N.)
Wise, F. J.


McInnes, J.
Rogers, George (Kensington, N.)
Woodburn, Rt. Hon. A.


Mack, J. D.
Ross, William
Woods, Rev. G. S.


McKay, John (Wallsend)
Royle, C.
Wyatt, W. L.


Mackay, R. W. G. (Reading, N.)
Shackleton, E. A. A.
Yates, V. F.


McLeavy, F.
Shawcross, Rt. Hon. Sir Hartley
Younger, Rt. Hon. K.


MacMillan, Malcolm (Western Isles)
Shinwell, Rt. Hon. E.
TELLERS FOR THE AYES:


McNeil, Rt. Hon. H.
Shurmer, P. L. E.
Mr. Michael Stewart and Mr. Sparks.




NOES


Aitken, W. T.
Bennett, Sir Peter (Edgbaston)
Braithwaite, Lt.-Cr. G. (Bristol, N. W.)


Alport, C. J. M.
Bennett, Dr. Reginald (Gosport)
Bromley-Davenport, Lt.-Col. W.


Amery, Julian (Preston, N.)
Bennett, William (Woodside)
Brooke, Henry (Hampstead)


Amory, Heathcoat (Tiverton)
Bevins, J. R. (Liverpool, Toxteth)
Browne, Jack (Govan)


Arbuthnot, John
Birch, Nigel
Buchan-Hepburn, P. G. T.


Ashton, H. (Chelmsford)
Bishop, F. P.
Bullock, Capt. M.


Assheton, Rt. Hon. R. (Blackburn, W.)
Black, C. W.
Bullus, Wing Commander E. E.


Astor, Hon. M. L.
Boles, Lt.-Col. D. C. (Wells)
Burden, F. A.


Baker, P. A. D.
Boothby, R.
Butcher, H. W.


Baldock, Lt.-Cmdr. J. M.
Bossom, A. C.
Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)


Baldwin, A. E.
Boyd-Carpenter, J. A.
Carr, Robert (Mitcham)


Banks, Col. C.
Boyle, Sir Edward
Carson, Hon. E.


Baxter, A. B.
Bracken, Rt. Hon. B.
Channon, H.


Beamish, Maj. Tufton
Braine, B. R.
Churchill, Rt. Hon. W. S.


Bell, R. M.
Braithwaite, Sir Albert (Harrow, W.)
Clarke, Col. Ralph (East Grinstead)







Clarke, Brig. Terence (Portsmouth, W.)
Hudson, W. R. A. (Hull, N.)
Pickthorn, K.


Clyde, J. L.
Hurd, A. R.
Pitman, I. J.


Colegate, A.
Hutchinson, Geoffrey (Ilford, N.)
Powell, J. Enoch


Conant, Maj. R. J. E.
Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Price, Henry (Lewisham, W.)


Cooper, Sqn. Ldr. Albert (Ilford, S.)
Hutchison, Col. James (Glasgow)
Prior-Palmer, Brig. O.


Cooper-Key, E. M.
Hyde, Lt.-Col. H. M.
Profumo, J. D.


Corbett, Lt.-Col. Uvedale (Ludlow)
Hylton-Foster, H. B.
Raikes, H. V.


Craddock, Beresford (Spelthorne)
Jeffreys, General Sir George
Rayner, Brig. R.


Cranborne, Viscount
Jennings, R.
Redmayne, M.


Crookshank, Capt. Rt. Hon. H. F. C.
Johnson, Howard (Kemptown)
Remnant, Hon. P.


Crosthwaite-Eyre, Col. O. E.
Jones, A. (Hall Green)
Renton, D. L. M.


Crouch, R. F.
Joynson-Hicks, Hon. L. W.
Roberts, Maj. Peter (Heeley)


Crowder, Capt. John (Finchley)
Kaberry, D.
Robertson, Sir David (Caithness)


Crowder, Petre (Ruislip—Northwood)
Kerr, H. W. (Cambridge)
Robinson, Roland (Blackpool, S.)


Cundiff, F. W.
Kingsmill, Lt.-Col. W. H.
Robson-Brown, W.


Cuthbert, W. N.
Lambert, Hon. G.
Rodgers, John (Sevenoaks)


Darling, Sir William (Edinburgh, S.)
Lancaster, Col. C. G.
Roper, Sir Harold


Davidson, Viscountess
Langford-Holt, J.
Ropner, Col. L.


Davies, Nigel (Epping)
Law, Rt. Hon. R. K.
Russell, R. S.


de Chair, Somerset
Legge-Bourke, Maj. E. A. H.
Ryder, Capt. R. E. D.


De la Bère, R.
Lennox-Boyd, A. T.
Salter, Rt. Hon. Sir Arthur


Deedes, W. F.
Lindsay, Martin
Sandys, Rt. Hon. D.


Digby, S. Wingfield
Linstead, H. N.
Savory, Prof. D. L.


Dodds-Parker, A. D.
Llewellyn, D.
Scott, Donald


Donner, P. W.
Lloyd, Rt. Hon. G. (King's Norton)
Shepherd, William


Douglas-Hamilton, Lord Malcolm
Lloyd, Maj. Guy (Renfrew, E.)
Smithers, Peter (Winchester)


Drayson, G. B.
Lloyd, Selwyn (Wirral)
Smyth, Brig. J. G. (Norwood)


Drewe, C.
Lockwood, Lt.-Col. J. C.
Snadden, W. McN.


Dugdale, Maj. Sir T. (Richmond)
Longden, Gilbert (Herts, S. W.)
Soames, Capt. C.


Duncan, Capt. J. A. L.
Low, A. R. W.
Spearman, A. C. M.


Dunglass, Lord
Lucas, Sir Jocelyn (Portsmouth, S.)
Spence, H. R. (Aberdeenshire, W.)


Duthie, W. S.
Lucas, P. B. (Brentford)
Spens, Sir Patrick (Kensington, S.)


Eccles, D. M.
Lucas-Tooth, Sir Hugh
Stanley, Capt. Hon. Richard (N. Fylde)


Eden, Rt. Hon. A.
Lyttelton, Rt. Hon. O.
Stevens, G. P.


Erroll, F. J.
McAdden, S. J.
Stewart, Henderson (Fife, E.)


Fisher, Nigel
McCorquodale, Rt. Hon. M. S.
Stoddart-Scott, Col. M.


Fort, R.
Macdonald, Sir Peter (I. of Wight)
Storey, S.


Foster, John
Mackeson, Brig. H. R.
Strauss, Henry (Norwich, S.)


Fraser, Hon. Hugh (Stone)
McKibbin, A.
Stuart, Rt. Hon. James (Moray)


Fraser, Sir Ian (Morecambe &amp; Lonsdale)
McKie, J. H. (Galloway)
Studholme, H. G.


Fyfe, Rt. Hon. Sir David Maxwell
Maclay, Hon. John
Summers, G. S.


Gage, C. H.
Maclean, Fitzroy
Sutcliffe, H.


Galbraith, Cmdr. T. D. (Pollok)
MacLeod, Iain (Enfield, W.)
Taylor, Charles (Eastbourne)


Galbraith, T. G. D. (Hillhead)
MacLeod, John (Ross and Cromarty)
Taylor, William (Bradford, N.)


Gammans, L. D.
Macmillan, Rt. Hon. Harold (Bromley)
Teeling, W.


Garner-Evans, E. H. (Denbigh)
Macpherson, Major Niall (Dumfries)
Teevan, T. L.


Gates, Maj. E. E.
Maitland, Cmdr. J. W.
Thomas, J. P. L. (Hereford)


Glyn, Sir Ralph
Manningham-Buller, R. E.
Thompson, Kenneth Pugh (Walton)


Gomme-Duncan, Col. A.
Marlowe, A. A. H.
Thompson, Lt.-Cmdr. R. (Croydon, W.)


Gridley, Sir Arnold
Marples, A. E.
Thorneycroft, Peter (Monmouth)


Grimston, Hon. John (St. Albans)
Marshall, Douglas (Bodmin)
Thornton-Kemsley, Col. C. N.


Grimston, Robert (Westbury)
Maude, Angus (Ealing, S.)
Thorp, Brig. R. A. F.


Harden, J. R. E.
Maude, John (Exeter)
Tilney, John


Hare, Hon. J. H. (Woodbridge)
Maudling, R.
Turner, H. F. L.


Harris, Frederic (Croydon, N.)
Medlicott, Brig. F.
Turton, R. H.


Harris, Reader (Heston)
Mellor, Sir John
Tweedsmuir, Lady


Harvey, Air Cdre. A. V. (Macclesfield)
Molson, A. H. E.
Vane, W. M. F.


Harvey, Ian (Harrow, E.)
Monckton, Sir Walter
Vaughan-Morgan, J. K.


Harvie-Watt, Sir George
Moore, Lt.-Col. Sir Thomas
Wakefield, Edward (Derbyshire, W.)


Hay, John
Morrison, John (Salisbury)
Wakefield, Sir Wavell (Marylebone)


Head, Brig. A. H.
Morrison, Rt. Hon. W. S. (Cirencester)
Walker-Smith, D. C.


Headlam, Lt.-Col. Rt. Hon. Sir (Cuthbert)
Mott-Radclyffe, C. E.
Ward, Hon. George (Worcester)


Heald, Lionel
Nabarro, G.
Ward, Miss I. (Tynemouth)


Henderson, John (Cathcart)
Nicholls, Harmar
Waterhouse, Capt. Rt. Hon. C.


Hicks-Beach, Maj. W. W.
Nicholson, G.
Watkinson, H.


Higgs, J. M. C.
Nield, Basil (Chester)
Webbe, Sir H. (London &amp; Westminster)


Hill, Dr. Charles (Luton)
Noble, Cmdr. A. H. P.
Wheatley, Maj. M. J. (Poole)


Hill, Mrs. E. (Wythenshawe)
Nugent, G. R. H.
White, Baker (Canterbury)


Hinchingbrooke, Viscount
Nutting, Anthony
Williams, Charles (Torquay)


Hirst, Geoffrey
Oakshott, H. D.
Williams, Gerald (Tonbridge)


Hollis, M. C.
Odey, G. W.
Williams Sir Herbert (Croydon, E.)


Holmes, Sir Stanley (Harwich)
O'Neill, Rt. Hon. Sir Hugh
Wills, G.


Hope, Lord John
Ormsby-Gore, Hon. W. D.
Wilson, Geoffrey (Truro)


Hopkinson, Henry
Orr, Capt. L. P. S.
Winterton, Rt. Hon. Earl


Hornsby-Smith, Miss P.
Orr-Ewing, Charles Ian (Hendon, N.)
Wood, Hon. R.


Horsbrugh, Rt. Hon. Florence
Orr-Ewing, Ian L. (Weston-super-Mare)
York, C.


Howard, Gerald (Cambridgeshire)
Osborne, C.



Howard, Greville (St. Ives)
Peake, Rt. Hon. O.
TELLERS FOR THE NOES:


Hudson, Sir Austin (Lewisham, N.)
Perkins, W. R. D.
Mr. Vosper and Mr. Heath.


Hudson, Rt. Hon. Robert (Southport)
Peto, Brig. C. H. M.

9.30 p.m.

Mr. Manningham-Buller: I beg to move, in page 25, line 10, to leave out subsection (4).
The Committee will see that the first four lines of this subsection contain the expression "central management and control." That is a term of art, and one defect in the Bill is that this term of art is not defined. I shall be grateful if the right hon. and learned Gentleman will confirm my understanding of the subsection which is that these four lines simply put into the statute what is the existing position at law—namely, that a company in which the central management and control is exercised in this country is deemed in law to be resident in this country.
I shall be grateful if, when I have finished, the right hon. and learned Gentleman will confirm that that is so and that this Clause does not in any way extend the ordinary definition of what amounts to residence in this country. If that be so, may I ask him to deal with this point? Management and control may be exercised in more than one country—part here and part in another country. I take it from the wording that this subsection means that all the central management and control has to be exercised in the United Kingdom.
I hope I have made this rather technical point clear, but it is a little difficult for me to express it and for him to take it in with so much murmuring going on. If the Committee will forgive me, I will make one further attempt to clarify what I have said. There is no definition in the Bill of this term of art "central management and control," and I take it that the intention is this: to bring the company within this Clause and to regard it as resident for the purpose of the Clause all the central management and control must be in this country. If that be so I would merely ask the right hon. and learned Gentleman to consider whether it would not be advisable, to save from dispute, controversy, and, possibly, litigation, to insert a definition of the expression "central management and control" in the Bill.

The Attorney-General: I entirely follow the desire of the hon. and learned Gentleman the Member for Northants, South (Mr. Manningham-Buller), but I confess I very much doubt whether the Clause would be improved if we

attempted to insert a definition. After all, in using this language, as he himself has pointed out, we are not treading new ground. What we are doing is, we are embodying in the terms of this Clause a conception which has been worked out very clearly in decided cases upon this issue.
The hon. and learned Gentleman no doubt knows that, as a result of a series of decided cases—it was decided in the De Beer's case, as it is called—a company is resident where we find the central management and control. Generally speaking, I think that the conception cannot be more clearly expressed than in the language used. It means that a company is resident where one can fairly say, looking at the operation of the company—I can only repeat the words—its central management and control is, in fact, exercised.
I feel that the danger, if we tried to define that any further, would be that we might begin to get away from the decided cases on the subject. In using the expression which appears in this Clause we do, in fact, pray in aid all the reasoning of the courts which has gone to try to formulate that conception. If it is considered that a case is on the fringe, or if there is doubt whether it comes within the circle or whether it is just outside it, one can have recourse to the reasoning of the various learned judges who have devoted their minds to trying to formulate this conception.
Therefore, I myself would be disposed not to accept this Amendment, for the reason that I have given, namely, that if we did accept it we should be putting aside a great deal of learning on the subject, and we should, perhaps, be putting out of the reach of lawyers and others who have to interpret the Clause recourse which they can have for drawing guidance to the reasoning in the judgments which have been devoted to working out the issue, and what, I think is quite clearly an intelligible conception. I think that for persons engaged in the conduct of a company it would ordinarily be a matter not of great difficulty to say in what country is its central management and control.

Mr. Manningham-Buller: Would the right hon. and learned Gentleman answer the second question that I put to him, which I think must be answered before


we part with this Clause, for otherwise the matter will be left in doubt and uncertainty? Will he answer it, even if he does not put in a definition? The second question I put to him was: Did this Clause mean that the central management and control had to be in this country for the company to be resident? I put that question because, as he knows, it has been held that the management and control can be divided, in the case of certain companies, between two different companies. We surely must know what is meant in this particular connection. If he cannot answer me now, perhaps he will give consideration to it; but I hope he will be able to answer now.

The Attorney-General: I certainly will give consideration to it, as the hon. and learned Gentleman asks me to; but we are talking about one company at a time, and with respect to any particular company one can always say where is its central management and control. The words are not "management and control" but "central management and control." It is perfectly true that a company may in certain circumstances be controlled in two countries. There may be exercised a control in more than one area, or, indeed, in more than one country; but one cannot bring anybody within the terms of this Clause.
Therefore, one cannot render him liable to have proceedings taken against him, unless one can establish affirmatively that the central management and control—that is to say, the core and kernel of it—is in a particular country. I should have thought that the position was reasonably clear on those lines.

Mr. Manningham-Buller: As the right hon. and learned Gentleman says that he will have another look at it, and in view of the authorities on that particular point, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Selwyn Lloyd: I beg to move, in page 25, line 17, to leave out "any year of assessment," and to insert:
the year of assessment 1951–52 or any subsequent year of assessment.

The Temporary Chairman (Mr. Diamond): I suggest to the Committee that perhaps it would be convenient if

we also discussed the next Amendment standing in the name of the hon. and learned Gentleman, in line 18, to leave out "chargeable accounting period," and to insert:
any chargeable accounting period ending after the end of the year nineteen hundred and fifty.

Mr. Lloyd: I am quite agreeable to that course.
The purpose of these Amendments is to make clear whether there is intended to be any retrospective element in this Clause. I think it is fairly clear that it is not intended to be retrospective. It seems to me that the inclusion of these words would make it quite certain that, so far as the resumption of residence is concerned, there will be no retrospective element. The purpose of the Amendments is to ensure that the Clause will not operate retrospectively.

The Attorney-General: There is no element of retrospection. This is merely a matter of proof. The proviso is to this effect. If it can be shown that at any time in the past—that is, including a time before the passing of the Act—the company has been treated as resident here, that creates a prima facie presumption that it is still resident. It would be to the interests of both sides that what is an obviously accepted fact in any given case—namely, that a company has always been regarded, or was regarded at the particular time, as resident here—should be sufficient to create a presumption that it is still resident. It does not create any offence in respect of any period antecedent to the Act. It is simply a matter of proof.

Mr. Selwyn Lloyd: That is the matter I desired to clear up, and, in view of the Attorney-General's assurance on the point, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Eccles: I beg to move, in page 25, line 24, to leave out subsection (5) and to insert:
(5) Where the function of a body corporate consists wholly or mainly in the holding of investments or other property, a transfer of any of the investments of such a body corporate shall be treated as a transfer of part of the business of that body corporate only if the transfer is to, or to the nominee of, or to a trustee for a body corporate, over which that body corporate has control.


This seems to us to be an Amendment of some importance, because the subsection as it stands clearly aims at the mining finance houses who conduct their business, not only by lending money to develop mines but by holding shares in those mines as the means by which they control a large number of very important companies overseas which provide raw materials and gold for the British Empire. It seems to me that if the Clause were passed unamended it would cut right across the established and highly successful practice which has been built up, not suddenly but over many years, in the City of London for the most economical use of our capital resources in making these overseas developments.
The subsection, as drafted, says:
a transfer of any of the investments of such a body corporate made in pursuance of a sale thereof on a stock exchange.
shall be exempt. It is not only through a stock exchange that shares are sold in overseas businesses. I am not sure that we have not had this point before. When a mine is developed it is common practice to go to other houses which are prepared to take risks, and to say to them, "Will you take 5 per cent.?"; not only in the first capital that has to be put up but in succeeding slices of capital that are required as the development goes forward. The results of that development make it reasonable to carry the mine to the point of exploitation—a very expensive operation.
9.45 p.m.
I do not see how, under this Clause, a financing company—one of the great South African houses registered in London—would be able to make a private deal of that kind in the shares of one of the developing mines in, say, the Orange Free State or a new oil company in Trinidad or Venezuela—how they would be able to go to one of their associates in this sort of business and say, "Will you come in with us." I think that they would have to get Treasury permission. That does not seem to me at all sensible, since this is an established way of sharing a risk on developing great overseas resources which the whole Committee desires to see brought to production as rapidly as possible.
The Empire was never developed and could never have been developed had we

put this kind of strait-jacket on everybody. It would not be right at this time to say, "You have to go to the Treasury to get permission to do all these different acts," many of them extremely risky, many of them not much more than a leap in the dark. I may say from my own experience that many of them result in losses and that people do not always make profits when they go after these minerals and oil in the Empire. How is the Treasury to estimate that kind of risk, and say, "You may or you may not do it"?
As hon. Members know, very often there is a foreign partner in these businesses. A concession is obtained from some resident in a foreign country, and he says, "I want to have a share in this, too." That is reasonable enough. It may be the cheapest way to get a concession out of a foreign country which we are developing. Yet apparently every time we are to issue him any shares, if they do not go through the Stock Exchange, and if the person issuing the shares falls under this definition of a body corporate whose functions consist
wholly or mainly in the holding of investments or other property"—
and I imagine other property would cover mining concessions and mineral rights—then apparently that body corporate in the United Kingdom would have to ask permission to carry out what might be the only possible arrangement with a foreigner.
It is a choice between trying to catch the imaginary tax dodger who may become a real one once in a way and disturbing the whole range of our relations with overseas companies in financing development. I admit that it would be a good thing to catch anyone who evaded our revenue, but we can pay too high a price for that. I could not help hoping, when the Chancellor told us, in a previous discussion in relation to subsection 1 (c), that he was prepared to put Amendments in the Bill having a dispensatory power and to see if there were certain classes of transactions which would not come within the purview of the Commissioners, that he would make similar Amendments to this Clause.
What we are suggesting—and I hope that it will meet with the approval of the Chancellor—is a much narrower Amendment. We think that the only


occasion on which there is real cause to go after a mining finance house here when it does a transaction of this kind is when it intends to part with the control of its overseas subsidiary. That is a serious act and means, of course, the migration of control from this country to overseas. It will not occur very often and, therefore it is the sort of thing which I should have thought the Treasury might well look at. It is reasonable to say that that is the essential type of transaction against which the Government wants to start a new hunt.
Let us begin, as we always do in this country, by concentrating on the possibility of the big fish who escapes. Let us for the time being go after the big fish and if we make that restriction the thing may work. But it is absolutely unworkable as it is now, because it would bring within the purview of the Treasury a vast range of transactions which are happening almost every day. That I cannot believe is what is wanted.

Mr. Jay: Perhaps it would abbreviate the discussion if I said at once that we are in sympathy with what I think is the main purpose of this Amendment. We have brought the investment companies within the general ambit of this Clause. We have provided that the transfer of securities by such companies by way of sales on the Stock Exchange shall be exempt provided they are not in favour of a subsidiary under the parent company's control. What the hon. Member wishes to do is to widen it so that the transfer is not limited to sales on the Stock Exchange. That, in principle, we are prepared to do and to draft an Amendment to that effect before the Report stage. The reason why we cannot accept the Amendment in this precise form is because it would take investment companies out of the Clause altogether.

Mr. Eccles: I am grateful for the concession and I hope it will refer to other property if other property also covers mining leases as well as shares because we feel that is an important point. Having got this concession from the Government I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Manningham-Buller: I beg to move, in page 25, line 42, to leave out

from "'control')," to end of line 44, and to insert:
means the power of a person to secure by means of the holding of shares or the possession of voting powers in or in relation to that or any other body corporate, or by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate, that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person.
I move this Amendment with high hope that it will also receive sympathetic consideration. The Amendment seeks to deal with two points. The first is that the Bill as it stands legislates by reference to a definition of "control" to show what "control" means when it is used apart from the expression "central management and control." To find out, one has to turn up another Act and that is also very tiresome, particularly to lawyers.
This Amendment sets out the definition of "control" as in Section 68 of the Income Tax, 1945, with the only difference that it omits from the definition contained in Section 68 the reference to a partnership, which does not come within the scope of this particular Clause. Therefore, our Amendment makes it quite clear what is the definition but eliminates unnecessary verbiage. I move this Amendment in the hope that it will appeal to the right hon. and learned Gentleman, and I hope he will accept it as improving the meaning of this extremely bad Clause.

The Attorney-General: Subject to one or two very small drafting changes, we shall be very glad to accept the Amendment.

Mr. Manningham-Buller: I am grateful to the right hon. and learned Genlteman, and in view of his undertaking I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Lyttelton: We have been hearing a good deal about taxes in the last few days. I do not want to tax the patience of the Committee by deploying arguments again on this Clause. It will be within the recollection of hon. Members that we were allowed to go very wide in the arguments on one of the Amendments to the Clause, so I will confine myself to making one or two appeals to the Chancellor.


I want him very much to write into the Bill some of those cases of exemption. I am going to inflict one instance upon the Committee of the absurdities which will arise in practice if none of these exemptions are specified.
We are really getting, Mr. Diamond, into a situation where even courtship will become almost impossible. The young man is going to have to say to the young lady, "Will you be mine, subject to Treasury sanction?" If she says, "Yes," he may then have to say, "I will give you an engagement ring, subject to Treasury sanction, or I can give you a few shares in my company, subject to the Chancellor of the Exchequer saying that the transaction is outside Clause 32." It would help us all if some of these commercial courtships were on grounds where we knew that the lady was not going to be disappointed in her expectations.
I will give one example of the sort of absurdity which will arise. I have the permission of the people concerned to mention the name of the company. The company is the Indian Mining and Construction Company, Limited, and they are responsible for the production of one third of the coal in India. Fifty-one per cent. of the shares are held in this country and 49 per cent. are held by the Indian Government. The Indian Government have appointed half the directors of the company and—this is where I shall strike a note of sympathy from the Treasury Bench—all the nominees of the Indian Government happen to be Ministers.
That is the way they do things in that sub-continent. We do not do the same thing here. Perhaps Ministers would like to alter that. According to this Clause, all of whom would come under the penalties in the Clause, which says:
Any person who, whether within or outside the United Kingdom, does or is a party to the doing of any act …
etcetera, goes to prison for a couple of years and has £10,000 lifted. This is the kind of absurdity that we shall get into.
I would press upon the Chancellor that we really think—and I could not say this with greater sincerity or emphasis—that this Clause will catch all kinds of perfectly legitimate transactions and will drive business away from this country. Short of tearing the whole thing up and beginning again, perhaps, the most useful

and practical thing that the Chancellor could do would be to write into this Clause the classes of exemption and exception. That would be a great help.
I would say one word about Treasury committees. We are often told that an advisory committee will be set up with Sir Somebody as Chairman and Sir Somebody Else among the members. That is the sort of thing we have had frequently in the last few years, but it will not do any longer. We have all had experience of the fitful and wayward working of the Capital Issues Committee. I have a particularly bitter memory of a recent decision of that Committee saying that I was permitted, if I could get round the tax difficulties, which I have not been able to do, to issue to the workers in my company one million £2 shares that were worth a fiver. We were anxious that they should come into the fortunes of the company at a price which would ensure that they were not affected by the ordinary fluctuations of the market.
I could not do it because the Inland Revenue stymied me. Incidentally, the stymie has been done away with by the Royal and Ancient. At the same time that they gave me the permission to issue £2 shares to the workmen on the shop floor, they forbade me to issue one million £2 shares to the shareholders. The Capital Issues Committee, instead of being, as I thought, a financial body, has become a political and sociological body.
They say, "While it is perfectly fair to issue a £2 share to A you must not issue a £2 share to B. We do not like it." That is how the thing works, and that is what will be happening in the cases covered by Clause 32. It sounds very nice when the Minister comes to the top like an octopus and squirts out the usual thing, "It will all be all right; there will be a committee which will act sensibly," but from our experience, unfortunately, we know otherwise.
10.0 p.m.
I hope that what I have said has not sounded too lighthearted. It is really only my language which is lighthearted. My heart is heavy. I believe that this provision will do great damage to the business community and the only practical way of improving the Clause, short of tearing it up, is to give the non-tax-evading public and public companies opportunities of judging that a large number


of transactions will fall outside the Clause.
The Chancellor must believe me when I tell him that the business community will not be satisfied at being fobbed off with another committee. As I said before, that is the protective colouring adopted by modern Governments when they get in a jam. They appoint another Royal Commission, which means that during the tenure of office of that body they will not be able to make up their minds on the matter. They are able to say that the matter is being considered by a committee, although the people on it are judging affairs which they have never been trained to judge. I hope that I shall receive a favourable response from the right hon. Gentleman.

Sir Edward Boyle: I rise to answer a point made by the Chancellor in a speech last night. He said:
… I do not think that they"—
the Opposition—
paid enough attention to the circumstances in which the Government decided it was necessary to introduce this provision."—[OFFICIAL REPORT, 12th June, 1951; Vol. 488, c. 2197.]
That is not true. Hon. Members on this side of the Committee fully realise the difficulties which will arise when we have a heavy rate of tax on distributed profits, but there is no more difficult political decision to make than to decide whether or not the cure for an admitted evil will make matters worse instead of better.
It may be that in drafting the Clause the Chancellor did not realise that while it might mitigate one evil, it could easily bring a more serious evil in its train. The Clause runs clean up against the whole development of company finance over a very large number of years. There has been a good deal of talk in the debate about the trade and monetary facilities which this country has offered for over a century. That is not just a form of words.
During the last Parliament I read a powerful speech by the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) shortly after devaluation, the tenor of which was that we were having a balance of payments difficulty after the war, but that we had had such difficulties before the war also and had not balanced our visible trade then. It is true that there was an unbalance on our

visible trade before the war, but we had no serious balance of payments problem because of our very high rate of invisible exports, for which the monetary and trade facilities of this country and the position of London as a commercial centre were so much responsible.
It is unfortunate that in the Clause we deal a blow against the confidence which people have felt in London as a commercial centre. While I readily believe that the Chancellor will do something to improve some of the provisions in the Clause to which we have objected, and that some detailed matters will be put right, it seems a tremendous pity to have introduced a Clause which has struck a great deal of dismay into the hearts of those who wish this country well and remember the days of Britain's commercial prosperity.

Mr. Pitman: I think that the whole Committee are extremely worried and distressed by this Clause. Hon. Members realise that it is doing severe harm to a free economy and that it savours in its procedure of the Iron Curtain. It has been justified rather feebly by the Chancellor and by the Attorney-General largely on the ground that there are so many people who are likely to get out of Profits ments.
It is highly significant that while the rate of taxation on undistributed profits is 10s. 3d., only 9d. of that is on the Profits Tax whereas 9s. 6d. of it is on the Income Tax. Why is there all this difficulty over the Profits Tax? What is the principle connected with Profits Tax which makes it necessary to have such elaborate and Draconian Clauses as this one? Why have we not had this for Income Tax?
The Chancellor may say that when we had 100 per cent. E.P.T. he needed special arrangements of this kind. That is true. If taxation is at too high a rate, then one finds among those people who keep books a need for safeguards. Do not let the Chancellor forget that it is only in controlling the people who are honest enough to keep books that this will be in the slightest degree effective. All the others will be outside it.
But why is it that we must have for the Profits Tax such a Draconian Clause as this one? I am sorry that the hon. Member for Sowerby (Mr. Houghton) is not here at the moment. The great


advantage of our system of income taxation is that it is self-collecting. Everybody wants an income and it is quite useless for anybody to conduct any undertaking unless what it earns is distributable eventually in the form of income. By and large, except for payments in kind, it is true that the only form of adjustment that can be made is to postpone the date at which tax on income is due. A person cannot get out of paying it, otherwise he does not have any income, because if it is not shown as income it cannot be distributed.
But in the case of Profits Tax we are not taxing income but something called profit, and people can and do alter the nomenclature of what is received so that what otherwise would be called profit can be called something else—interest on notes, interest on debentures, rents or anything else. They have only to alter the label on the bottle for the bottle not to come within the mischief of the tax. The whole trouble arising out of this Clause is there in essence. It is there because it is a tax which throws away the natural advantages of the tax gatherer. Income Tax is a self-collecting tax because people want the income.
I should like the Chancellor of the Exchequer to bear in mind the enormous staff whom he has under his control collecting this tax. It is most important that there should be the best possible relations between the taxpayer and the tax gatherer. Tax gathering is a most unpopular and unpleasant job. It is a very great cause of friction if the tax gatherer has to administer a tax which will create friction because it is based on a system which enforces Clauses of this kind. Taxpayers up and down the country will be upset enormously by this type of legislation. I am glad to see that the hon. Member for Sowerby has now returned, and I am sure he will agree that it is most important, in the relationship of tax gathering and tax paying, that the taxpayer should not feel aggrieved by Draconian Clauses of this kind.

Mr. Joynson-Hicks: I want to add a word to what my hon. and right hon. Friends have said, but from a slightly different point of view. My hon. Friends have spoken as to the effect of the Clause upon commerce and finance, but I want to put a question to the Chancellor from a far more general angle. I remind the Committee that this is not a tax evasion

Clause. It is a Clause which makes illegal that which hitherto has been legal. Therefore, it is difficult to see why the Chancellor has come to the conclusion that there is such a probability of an attempt to evade the law under the Clause that he has found it necessary to put into it such very stringent penalties as it carries.
There is no experience to guide me upon the possibility of the Clause not being fulfilled as all other laws of the country normally are fulfilled. The question I want to ask the Chancellor is: What is the real reason he has found it necessary to put into this form whatever object he has in trying to put into law the principle of the Clause. In asking the right hon. Gentleman that question, I will tell him what the reason is believed to be by many perfectly sane and reasonable people in industry. They believe that there is only one object in the Clause which lies behind the Chancellor's mind: that is, that it is so to force them out of business that he will be able to nationalise their industries. I expected that that remark would raise derisive laughter from the Socialist benches. Nevertheless, I pass that information to the Chancellor because it is held widely by reasonable and sane people.

Mr. Gaitskell: We have had a long and interesting discussion on the Clause, and I should like now to sum up from this side of the Committee. I think that the hon. Member for Chichester (Mr. Joynson-Hicks) would probably agree that if his friends would read the report of our debate, they would fully understand that the purpose of the Government in bringing in the Clause had nothing whatever to do with nationalisation. It was simply for the purpose of checking tax avoidance—I do not say tax evasion.
I assure the Committee that, as I said yesterday, it was only the facts with which we were confronted—that there was a tendency to migrate on a fairly considerable scale, involving what seemed to me to be fairly serious losses to the Revenue—that induced us to do this. We did not, of course, do it in any light-hearted manner. We spent a very long time considering the matter and trying to find whether there was any other way in which we could check this tendency, and we came to the conclusion that we would, nevertheless, have to do this.
The issues between the two sides of the Committee are fairly clear. Hon. Members opposite do not regard the tax avoidance, of which I have spoken, as such a serious factor as we do; and on the other hand they take a more serious view of the possible consequences to legitimate business which the Clause will have. That really sums up the difference between us.

10.15 p.m.

Captain Crookshank: Did the right hon. Gentleman say that we were not interested in tax avoidance?

Mr. Gaitskell: The right hon. and gallant Gentleman could not have heard what I said. I was trying to explain, quite fairly and objectively, the difference between the two sides of the Committee and, for his benefit, I will repeat it. I believe that hon. Members opposite do not take the seriousness of the tax avoidance involved here to be as serious as we do—

Captain Crookshank: Captain Crookshank rose—

Mr. Gaitskell: Perhaps I might finish, since the right hon. and gallant Gentleman asked the question—and, on the other hand, they estimate as more serious the consequences to legitimate businesses that this Clause would involve.

Captain Crookshank: I am sorry to interrupt the right hon. Gentleman, but his words imply a misunderstanding. Does he mean by "seriousness" a serious matter, or does he mean the amount of money involved, about which we may differ?

Mr. Gaitskell: The amount of money involved and the consequences that tax avoidance has in a more general way on people's attitude to defence, work, and so on.

Captain Crookshank: I am sorry to press the right hon. Gentleman, but I am sure he does not wish to misrepresent the point of view of this side of the Committee. About the amount of money involved we cannot be in as good a position to judge as he is, but when it comes to the question of seriousness from the moral point of view of tax avoidance, we feel just as strongly as he does.

Mr. Gaitskell: I am interested to hear the right hon. and gallant Gentleman say that, but again and again—I am not complaining about this, it is a perfectly legitimate point of view—one hon. Member opposite after another has been getting up and saying, "We admit there may be a certain amount of tax avoidance but really we should not worry because the consequences of this Clause are much more serious." I do not think I am saying anything in the least unfair, or misrepresenting what has been said by hon. Members opposite and I am surprised at the right hon. and gallant Gentleman taking me up on the point.
I have been asked whether I would write into the Bill some of the exemptions we propose to make through the procedure of giving the Treasury power to make exemptions. I have already said we will make some amendments. I said so in response to the original Amendment of the hon. Member for Chippenham (Mr. Eccles) and the Financial Secretary has added another now. That is all I am prepared to do at the moment.
I must repeat that it is an extremely difficult thing, in advance, to specify precisely what we are going to exempt. Indeed, the discussion we have had shows that, because, if the Opposition had put down some perfectly clear cases of exemptions we had no anxieties about, we would not have objected to accepting the Amendments. But the fact is that every one of their Amendments on those lines was objectionable for one reason or another and I think they realised that.
That is the difficulty we must all face, but I repeat we have no desire whatever to clutter up the Treasury and the Inland Revenue with a lot of unnecessary requests for exemption—unnecessary in the sense that it is a legitimate business. We will certainly draw up a list under the proposed procedure as soon as we can and as soon as we have sufficient experience.
I was a little sorry that the right hon. Gentleman made such a vicious attack on committees. As far as I can remember the Capital Issues Committee, about which he was particularly rude, was, in its original form, set up by a Conservative Government. Then, as the Foreign Transactions Committee, it was concerned very much with capital issues


for foreign investment. I must remind the right hon. Gentleman that there is a most important new Clause, entitled Purchase Tax Advisory Committee, in his name proposing to set up a Purchase Tax committee. The fact is that the Opposition like committees if they suit the purpose of the Opposition, but do not like them if they do not serve their purpose.

Mr. Lyttelton: The right hon. Gentleman seems touchy about these things. The Purchase Tax committee would be an advisory committee to get us out of a Parliamentary difficulty and it is not concerned with day to day commercial transactions but to deal with a series of taxes; it is entirely different. I was never against the Import Duties Advisory Committee. What I object to is committees of experts, working from terms of reference which no responsible man can follow, which interfere with the day to day transactions necessary to business life.

Mr. Gaitskell: The right hon. Gentleman did not give me the impression that he was making such careful selections between one committee and another, but the point is a minor one. I will only say that I do not think it is the purpose of the right hon. Gentleman to ask me not to appoint such a committee. It was an idea that I thought would commend itself to the Committee and to the business and trading interests concerned.
I was anxious to assure them that we were not looking at this matter purely from the point of view of the Inland Revenue. Again and again hon. Members opposite have said, "The trouble is that the Inland Revenue has advanced too far into Whitehall. It is getting control of the situation." That is not in the least true but I thought that it would give them some assurance to know that we were to set up such a committee.

Sir J. Mellor: Will the committee give reasons for their decisions, and will the Chancellor, when asked questions in this House about the decisions, shelter himself behind the committee?

Mr. Gaitskell: The hon. Member knows perfectly well that it is not the practice of the Chancellor of the Exchequer to discuss the tax affairs of individual companies or persons. If I may say so, that is a very sound rule.

Sir J. Mellor: Sir J. Mellor rose—

Mr. Gaitskell: The hon. Member will no doubt have an opportunity to put the point further when I announce the committee and its terms of reference.

Sir J. Mellor: In this debate?

Mr. Gaitskell: I said when I come to announce the committee and its terms of reference.
The Opposition say, "We are against tax avoidance, but you should not go at it in this sweeping manner. You should attack the tax evader stage by stage." But what does that mean? We have had no clear indication of what precisely they would do in this situation. It is not a matter of just a few people trying in a hole-and-corner manner to avoid tax. I am glad that it has been emphasised from the other side of the Committee that this is tax avoidance which is quite legitimate.
There is no doubt that had we taken no action this would have developed on a considerable scale. As hon. Members opposite are always pointing out to us, the sums involved are quite considerable so far as the companies are concerned. They are under pressure from their shareholders to do the best they can to avoid payment of tax. It is extremely easy for most of them to effect the transfer of management and control of the company. It can be achieved quite simply and, in practice, involves little more than changing the place at which the directors hold their meetings. By means of air travel they can move extremely fast, meeting one day a fortnight or one day a month, keeping the same directors as before.
I have no doubt that once this tendency caught hold it would spread rapidly, and we should lose a serious amount of Revenue. Those are the facts of the situation to which the Opposition have never faced up.

Viscount Hinchingbrooke: The Government have created the situation.

Mr. Gaitskell: The noble Lord says that we have created the situation. But we are not at the moment discussing the level of taxation. As my hon. Friend said last night, the Opposition have not opposed either the increase in Profits Tax or the increase in Income Tax. I do not


think that it really fits in with their attitude on those taxes that they should now be taking up the attitude that they are doing.

Mr. Lyttelton: I do not wish to interrupt the right hon. Gentleman unnecessarily, but I cannot quite let what he said about change of domicile being very easy go without intervening. As a matter of fact, it is perfectly possible for a company to change its domicile—that is very easy—but it is almost impossible for a big company to carry on away from the capital market of London and so forth. Many of these instances are confined to very small companies.

Mr. Gaitskell: It depends on the circumstances. There are quite sufficient companies, as I have said from the start, that trade with overseas nations. These are usually the companies with which we are concerned and which can move quite easily.
The issues have been posed very fairly. We are determined not to allow these things to go on but we wish to deal with it in as reasonable a manner as we can. I have explained to the Committee how we intend to administer it and I am certain there is no need for the anxiety expressed about the consequences that this would have. We shall be able to stop tax avoidance in this way and I see no reason to suppose there will be any inconvenience to legitimate business.

Mr. H. Strauss: I wish to put one point of some importance. What astonishes me is that the right hon. Gentleman, after dealing with the mischief he seeks to remedy in this Clause, should not have counted the price he is paying. In the first speech he made on the Clause, he acknowledged the Tightness of the point made by my right hon. Friend the Member for Aldershot (Mr. Lyttelton) about the deterrent effect. One thing which is quite certain is that when this Bill is on the Statute Book any company wishing to carry on business abroad and not already formed in this country will have every reason for not coming to this country. That is the deterrent effect.
Hitherto it has been of advantage to companies wherever in the world they traded to have their headquarters in the United Kingdom. That advantage he is

throwing away knowingly. I would refer to what he said to my right hon. Friend yesterday:
The right hon. Gentleman made a good deal of play with the deterrent effect the Clause would have on companies coming here. I think that is a fair point, and I do not see why we should not say, as we do in the case of some foreign investment today, 'If you come here from abroad to set up a business with substantial foreign capital, we are prepared to exempt such companies.'"—[OFFICIAL REPORT, 12th June, 1951; Vol. 488, c. 2203–4.]
Just see the discrimination which that involves. It says that if any company of that sort has come here in the past we imprison them and do not allow them that advantage, but, because we recognise how disastrous that will be for the future, we say that exactly similar companies coming here hereafter we will exempt. That discrimination is wholly inconsistent with the reputation of the City of London and this country.
The right hon. Gentleman has not counted the cost of what he is doing. I endeavoured, I think fairly, to sum up what is certainly the result of this Clause. Its purpose must be to deter persons able to form companies elsewhere from registering and incorporating such companies in the United Kingdom. That is the result of the Clause on which we shall shortly proceed to a Division, and, if it is the result, it also must be presumed to be the intention.

Sir J. Mellor: It would not have been necessary for me to speak now if the Chancellor of the Exchequer had allowed me to press my question about the advisory committee. He said I could wait and ask a question when he announced that it was being set up. After all, we are discussing now a Clause which he is defending apparently because he has told us he is going to set up an advisory committee to see that all people are treated with consideration and fairness.
I complained that in the case of previous advisory committees like the Capital Issues Committee, no reasons have been given for their decisions. To that he said that, of course, the affairs of a taxpayer could not be divulged publicly. That is quite right; of course they cannot; but they should be divulged to the taxpayer. In the case of the Capital Issues Committee they have not


given their reasons even to applicants whose applications had been refused.
I think it most important that applicants to whatever committee he now proposes to set up should be given reasons for the committee refusing their application. Frequently when Questions have been asked in this House with regard to applicants who have been refused permission by the Capital Issues Committee to raise money, the Chancellor has said, "Well, the Capital Issues Committee has turned down the application, and I cannot go behind that." I appreciate that he cannot divulge the affairs of the individual taxpayer to the public, unless the taxpayer consents.
When this committee is set up, will he agree, when an application is turned down and if the applicant so desires, to declare publicly, in reply to a question in the House, the reasons for turning down the application. Surely that is a fair point.

Unless the Chancellor is prepared to agree, first, that the committee shall give reasons to the applicant, and secondly, that, with the assent of the applicant, he will give reasons to the House, it means simply that he is sheltering himself behind the committee. We, representing our constituents, will have no opportunity of extracting the truth from the right hon. Gentleman.

I think this is a serious matter and one on which the Chancellor should reply further now. It is no good waiting until the Clause is embodied as a Section in the Act; then he will be able to do what he likes with regard to the constitution and practice of the committee. We want to know now, and I ask him to tell us.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 300; Noes, 283.

Division No. 134.]
AYES
[10.31 p.m.


Acland, Sir Richard
Cooper, John (Deptford)
Glanville, James (Consett)


Adams, Richard
Corbet, Mrs. Freda (Peckham)
Gooch, E. G.


Albu, A. H.
Cove, W. G.
Gordon-Walker, Rt. Hon. P. C.


Allen, Arthur (Bosworth)
Craddock, George (Bradford, S.)
Granville, Edgar (Eye)


Allen, Scholefield (Crewe)
Crawley, A.
Greenwood, Anthony (Rossendale)


Anderson, Alexander (Motherwell)
Crosland, C. A. R.
Greenwood, Rt. Hn. Arthur (Wakefield)


Anderson, Frank (Whitehaven)
Crossman, R. H. S.
Grenfell, Rt. Hon. D. R.


Attlee, Rt. Hon. C. R.
Cullen, Mrs. A.
Grey, C. F.


Awbery, S. S.
Daines, P.
Griffiths, David (Rother Valley)


Ayles, W. H.
Dalton, Rt. Hon. H.
Griffiths, Rt. Hon. James (Llanelly)


Bacon, Miss Alice
Darling, George (Hillsborough)
Griffiths, William (Exchange)


Baird, J.
Davies, A. Edward (Stoke, N.)
Gunter, R. J.


Balfour, A.
Davies, Rt. Hon. Clement (Montgomery)
Hale, Joseph (Rochdale)


Barnes, Rt. Hon. A. J.
Davies, Harold (Leek)
Hale, Leslie (Oldham, W.)


Hartley, P.
Davies, Stephen (Merthyr)
Hall, Rt. Hon. Glenvil (Colne Valley)


Bellenger, Rt. Hon. F. J.
de Freitas, Geoffrey
Hall, John (Gateshead, W.)


Benn, Wedgwood
Deer, G.
Hamilton, W. W.


Benson, G.
Delargy, H. J.
Hardman, D. R.


Beswick, F.
Dodds, N. N.
Hardy, E. A.


Bevan, Rt. Hon. A. (Ebbw Vale)
Donnelly, D.
Hargreaves, A.


Bing, G. H. C.
Driberg, T. E. N.
Hastings, S.


Blenkinsop, A.
Dugdale, Rt. Hon. J. (W. Bromwich)
Hayman, F. H.


Blyton, W. R.
Dye, S.
Henderson, Rt. Hn. Arthur (Tipton)


Boardman, H.
Ede, Rt. Hon. J. C.
Herbison, Miss M.


Booth, A.
Edelman, M.
Hewitson, Capt. M.


Bottomley, A. G.
Edwards, John (Brighouse)
Hobson, C. R.


Bowden, H. W.
Edwards, Rt. Hon. Ness (Caerphilly)
Holman, P.


Bowles, F. G. (Nuneaton)
Edwards, W. J. (Stepney)
Holmes, Horace (Hemsworth)


Brook, Dryden (Halifax)
Evans, Albert (Islington, S. W.)
Houghton, D.


Brooks, T. J. (Normanton)
Evans, Edward (Lowestoft)
Hoy, J.


Broughton, Dr. A. D. D.
Evans, Stanley (Wednesbury)
Hubbard, T.


Brown, Rt. Hon. George (Belper)
Ewart, R.
Hudson, James (Ealing, N.)


Brown, Thomas (Ince)
Fernyhough, E.
Hughes, Emrys (S. Ayrshire)


Burke, W. A.
Field, Capt. W. J.
Hughes, Hector (Aberdeen, N.)


Burton, Miss E.
Finch, H. J.
Hynd, H. (Accrington)


Butler, Herbert (Hackney, S.)
Fletcher, Eric (Islington, E.)
Hynd, J. B. (Attercliffe)


Carmichael, J.
Follick, M.
Irvine, A. J. (Edge Hill)


Castle, Mrs. B. A.
Foot, M. M.
Irving, W. J. (Wood Green)


Champion, A. J.
Forman, J. C.
Isaacs, Rt. Hon. G. A.


Chetwynd, G. R.
Fraser, Thomas (Hamilton)
Janner, B.


Clunie, J.
Freeman, John (Watford)
Jay, D. P. T.


Cocks, F. S.
Freeman, Peter (Newport)
Jeger, George (Goole)


Coldrick, W.
Gaitskell, Rt. Hon. H. T. N.
Jeger, Dr. Santo (St. Pancras, S.)


Collick, P.
Ganley, Mrs. C. S.
Jenkins, R. H.


Collindridge, F.
George, Lady Megan Lloyd
Johnson, James (Rugby)


Cook, T. F.
Gibson, C. W.
Johnston, Douglas (Paisley)


Cooper, Geoffrey (Middlesbrough, W.)
Gilzean, A.
Jones, David (Hartlepool)




Jones, Frederick Elwyn (W. Ham, S.)
Mulley, F. W.
Strachey Rt. Hon. J.


Jones, Jack (Rotherham)
Nally, W.
Strauss, Rt. Hon. George (Vauxhall)


Jones, William Elwyn (Conway)
Neal, Harold (Bolsover)
Stross, Dr. Barnett


Keenan, W.
Noel-Baker, Rt. Hon. P. J.
Summerskill, Rt. Hon Edith


Kenyon, C.
O'Brien, T.
Sylvester, G. O.


Key, Rt. Hon. C. W.
Oldfield, W. H.
Taylor, Bernard (Mansfield)


King, Dr. H. M.
Oliver, G. H.
Taylor, Robert (Morpeth)


Kinghorn, Sqn. Ldr. E.
Orbach, M.
Thomas, David (Aberdare)


Kinley, J.
Padley, W. E.
Thomas, George (Cardiff)


Lang, Gordon
Paling, Rt. Hon. Wilfred (Dearne V'lly)
Thomas, Iorwerth (Rhondda, W.)


Lee, Frederick (Newton)
Paling, Will T. (Dewsbury)
Thomas, Ivor Owen (Wrekin)


Lee, Miss Jennie (Cannock)
Pannell, T. C.
Thorneycroft, Harry (Clayton)


Lever, Harold (Cheetham)
Pargiter, G. A.
Thurtle, Ernest


Lever, Leslie (Ardwick)
Parker, J.
Timmons, J.


Lewis, Arthur (West Ham, N.)
Paton, J.
Tomney, F.


Lewis, John (Bolton, W.)
Pearson, A.
Turner-Samuels, M.


Lindgren, G. S.
Peart, T. F.
Ungoed-Thomas. Sir Lynd.


Lipton, Lt.-Col. M.
Porter, G.
Usborne, H.


Logan, D. G.
Price, Philips (Gloucestershire, W.)
Vernon, W. F.


Longden, Fred (Small Heath)
Proctor, W. T.
Viant, S. P.


McAllister, G.
Pryde, D. J.
Wallace, H. W.


MacColl, J. E.
Pursey, Cmdr. H.
Watkins, T. E.


Macdonald, A. J. F. (Roxburgh)
Rankin, J.
Webb, Rt. Hon. M. (Bradford, C.)


McGhee, H. G.
Rees, Mrs. D.
Weitzman, D.


McGovern, J.
Reeves, J.
Wells, Percy (Faversham)


McInnes, J.
Reid, Thomas (Swindon)
Wells, William (Walsall)


Mack, J. D.
Reid, William (Camlachie)
West, D. G.


McKay, John (Wallsend)
Rhodes, H.
Wheatley, Rt. Hon. John (Edinb'gh E.)


Mackay, R. W. G. (Reading, N.)
Richards, R.
White, Mrs. Eirene (E. Flint)


McLeavy, F.
Robens, Rt. Hon. A.
White, Henry (Derbyshire, N.E.)


MacMillan, Malcolm (Western Isles)
Roberts, Emrys (Merioneth)
Whiteley, Rt. Hon. W.


McNeil, Rt. Hon. H.
Roberts, Goronwy (Caernarvonshire)
Wigg, G.


MacPherson, Malcolm (Stirling)
Robertson, J. J. (Berwick)
Wilcock, Group Capt. C. A. B.


Mainwaring, W. H.
Robinson, Kenneth (St. Pancras, N.)
Wilkes, L.


Mallalieu, E. L. (Brigg)
Rogers, George (Kensington, N.)
Wilkins, W. A.


Mallalieu, J. P. W. (Huddersfield, E.)
Ross, William
Willey, Frederick (Sunderland)


Mann, Mrs. Jean
Royle, C.
Willey, Octavius (Cleveland)


Manuel, A. C.
Shackleton, E. A. A.
Williams, David (Neath)


Marquand, Rt. Hon. H. A.
Shawcross, Rt. Hon. Sir Hartley
Williams, Rev. Llywelyn (Abertillery)


Mathers, Rt. Hon. G.
Shinwell, Rt. Hon. E.
Williams, Ronald (Wigan)


Mellish, R. J.
Shurmer, P. L. E.
Williams, Rt. Hon Thomas (Don V'lly)


Messer, F.
Silverman, Julius (Erdington)
Williams, W. T. (Hammersmith, S.)


Middleton, Mrs. L.
Silverman, Sydney (Nelson)
Wilson, Rt. Hon. Harold (Huyton)


Mikardo, Ian.
Simmons, C. J.
Winterbottom, Ian (Nottingham, C.)


Mitchison, G. R.
Slater, J.
Winterbottom, Richard (Brightside)


Moeran, E. W.
Smith, Ellis (Stoke, S.)
Wise, F. J.


Monslow, W.
Smith, Norman (Nottingham, S.)
Woodburn, Rt. Hon. A.


Moody, A. S.
Snow, J. W.
Woods, Rev. G. S.


Morgan, Dr. H. B.
Sorensen, R. W.
Wyatt, W. L.


Morley, R.
Soskice, Rt. Hon. Sir Frank
Yates, V. F.


Morris, Percy (Swansea, W.)
Sparks, J. A.
Younger, Rt. Hon. K.


Morrison, Rt. Hon. H. (Lewisham, S.)
Steele, T.



Mort, D. L.
Stewart, Michael (Fulham, E.)
TELLERS FOR THE AYES:


Moyle, A.
Stokes, Rt. Hon. R. R.
Mr. Hannan and Mr. Popplewell.




NOES


Aitken, W. T.
Boyle, Sir Edward
Cranborne, Viscount


Alport, C. J. M.
Bracken, Rt. Hon. B.
Crookshank, Capt. Rt. Hon. H. F. G.


Amery, Julian (Preston, N.)
Braine, B. R.
Crosthwaite-Eyre, Col. O. E.


Amory, Heathcoat (Tiverton)
Braithwaite, Sir Albert (Harrow, W.)
Crouch, R. F.


Arbuthnot, John
Braithwaite, Lt.-Cr. G. (Bristol, N. W.)
Crowder, Capt. John (Finchley)


Ashton, H. (Chelmsford)
Bromley-Davenport, Lt.-Col. W.
Crowder, Petre (Ruislip—Northwood)


Assheton, Rt. Hon. R. (Blackburn, W.)
Brooke, Henry (Hampstead)
Cundiff, F. W.


Astor, Hon. M. L.
Browne, Jack (Govan)
Cuthbert, W. N.


Baker, P. A. D.
Buchan-Hepburn, P. G. T.
Darling, Sir William (Edinburgh, S.)


Baldock, Lt.-Cmdr. J. M.
Bullock, Capt. M.
Davidson, Viscountess


Baldwin, A. E.
Bullus, Wing Commander E. E.
Davies, Nigel (Epping)


Banks, Col. C.
Burden, F. A.
de Chair, Somerset


Baxter, A. B.
Butcher, H. W.
De la Bère, R.


Beamish, Maj. Tufton
Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)
Deedes, W. F.


Bell, R. M.
Carr, Robert (Mitcham)
Dodds-Parker, A. D.


Bennett, Sir Peter (Edgbaston)
Carson, Hon. E.
Donner, P. W.


Bennett, Dr. Reginald (Gosport)
Channon, H.
Douglas-Hamilton, Lord Malcolm.


Bennett, William (Woodside)
Churchill, Rt. Hon. W. S.
Drayson, G. B.


Bevins, J. R. (Liverpool, Toxteth)
Clarke, Col. Ralph (East Grinstead)
Drewe, C.


Birch, Nigel
Clarke, Brig. Terence (Portsmouth, W.)
Dugdale, Maj. Sir T. (Richmond)


Bishop, F. P.
Clyde, J. L.
Duncan, Capt. J. A. L.


Black, C. W.
Colegate, A.
Dunglass, Lord


Boles, Lt.-Col. D. C. (Wells)
Cooper, Sqn. Ldr. Albert (Ilford, S.)
Duthie, W. S.


Boothby, R.
Cooper-Key, E. M.
Eccles, D. M.


Bossom, A. C.
Corbett, Lt.-Col. Uvedale (Ludlow)
Eden, Rt. Hon A.


Boyd-Carpenter, J. A.
Craddock, Beresford (Spelthorne)
Erroll, F. J.







Fisher, Nigel
Llewellyn, D.
Robertson, Sir David (Caithness)


Fort, R.
Lloyd, Rt. Hon. G. (King's Norton)
Robinson, Roland (Blackpool, S.)


Foster, John
Lloyd, Maj. Guy (Renfrew, E.)
Robson-Brown, W.


Fraser, Hon. Hugh (Stone)
Lloyd, Selwyn (Wirral)
Rodgers, John (Sevenoaks)


Fraser, Sir Ian (Morecambe &amp; Lonsdale)
Lockwood, Lt.-Col. J. C.
Roper, Sir Harold


Fyfe, Rt. Hon. Sir David Maxwell
Longden, Gilbert (Herts, S. W.)
Ropner, Col. L.


Gage, C. H.
Low, A. R. W.
Russell, R. S.


Galbraith, Cmdr. T. D. (Pollok)
Lucas, Sir Jocelyn (Portsmouth, S.)
Ryder, Capt. R. E. D.


Galbraith, T. G. D. (Hillhead)
Lucas, P. B. (Brentford)
Salter, Rt. Hon. Sir Arthur


Gammans, L. D.
Lucas-Tooth, Sir Hugh
Sandys, Rt. Hon D.


Garner-Evans, E. H. (Denbigh)
Lyttelton, Rt. Hon. O.
Savory, Prof. D. L.


Gates, Maj. E. E.
McAdden, S. J.
Scott, Donald


Glyn, Sir Ralph
McCorquodale, Rt. Hon. M. S.
Shepherd, William


Gomme Duncan, Col. A.
Macdonald, Sir Peter (I. of Wight)
Smiles, Lt.-Col. Sir Walter


Gridley, Sir Arnold
Mackeson, Brig. H. R.
Smithers, Peter (Winchester)


Grimston, Hon. John (St. Albans)
McKibbin, A.
Smyth, Brig. J. G. (Norwood)


Grimston, Robert (Westbury)
McKie, J. H. (Galloway)
Snadden, W. McN.


Harden, J. R. E.
Maclay, Hon. John
Soames, Capt. C.


Hare, Hon. J. H. (Woodbridge)
Maclean, Fitzroy
Spearman, A. C. M.


Harris, Frederic (Croydon, N.)
MacLeod, Iain (Enfield, W.)
Spence, H. R. (Aberdeenshire, W.)


Harris, Reader (Heston)
MacLeod, John (Ross and Cromarty)
Spens, Sir Patrick (Kensington, S.)


Harvey, Air Cdre. A. V. (Macclesfield)
Macmillan, Rt. Hon. Harold (Bromley)
Stanley, Capt. Hon. Richard (N. Fylde)


Harvey, Ian (Harrow, E.)
Macpherson, Major Niall (Dumfries)
Stevens, G. P.


Harvie-Watt, Sir George
Maitland, Cmdr. J. W.
Steward, W. A. (Woolwich, W.)


Hay, John
Manningham-Buller, R. E.
Stewart, Henderson (Fife, E.)


Head, Brig. A. H.
Marlowe, A. A H.
Stoddart-Scott Col. M.


Headlam, Lt.-Col. Rt. Hon. Sir Cuthbert
Marples, A. E.
Storey, S.


Heald, Lionel
Marshall, Douglas (Bodmin)
Strauss, Henry (Norwich, S.)


Heath, Edward
Maude, Angus (Ealing, S.)
Stuart, Rt. Hon. James (Moray)


Henderson, John (Cathcart)
Maude, John (Exeter)
Studholme, H. G.


Hicks-Beach, Maj. W. W.
Maudling, R.
Summers, G. S.


Higgs, J. M. C.
Medlicott, Brig. F.
Sutcliffe, H.


Hill, Dr. Charles (Luton)
Mellor, Sir John
Taylor, Charles (Eastbourne)


Hill, Mrs. E. (Wythenshawe)
Molson, A. H. E.
Taylor, William (Bradford, N.)


Hinchingbrooke, Viscount
Monckton, Sir Walter
Teeling, W.


Hirst, Geoffrey
Moore, Lt.-Col. Sir Thomas
Teevan, T. L.


Hollis, M. C.
Morrison, John (Salisbury)
Thomas, J. P. L. (Hereford)


Holmes, Sir Stanley (Harwich)
Morrison, Rt. Hon W. S. (Cirencester)
Thompson, Kenneth Pugh (Walton)


Hope, Lord John
Mott-Radclyffe, C. E.
Thompson, Lt.-Cmdr. R. (Croydon, W.)


Hopkinson, Henry
Nabarro, G.
Thorneycroft, Peter (Monmouth)


Hornsby-Smith, Miss P.
Nicholls, Harmar
Thornton-Kemsley, Col. C. N.


Horsbrugh, Rt. Hon. Florence
Nicholson, G.
Thorp, Brig. R. A. F.


Howard, Gerald (Cambridgeshire)
Nield, Basil (Chester)
Tilney, John


Howard, Greville (St. Ives)
Noble, Cmdr. A. H. P.
Turner, H. F. L.


Hudson, Sir Austin (Lewisham, N.)
Nugent, G. R. H.
Turton, R. H.


Hudson, Rt. Hon. Robert (Southport)
Nutting, Anthony
Tweedsmuir, Lady


Hudson, W. R. A. (Hull, N.)
Oakshott, H. D.
Vane, W. M. F.


Hurd, A. R.
Odey, G. W.
Vaughan-Morgan, J. K.


Hutchinson, Geoffrey (Ilford, N.)
O'Neill, Rt. Hon. Sir Hugh
Vosper, D. F.


Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Ormsby-Gore, Hon. W. D.
Wakefield, Edward (Derbyshire, W.)


Hutchison, Col. James (Glasgow)
Orr, Capt. L. P. S.
Wakefield, Sir Wavell (Marylebone)


Hyde, Lt.-Col. H. M.
Orr-Ewing, Charles Ian (Hendon, N.)
Walker-Smith, D. C.




Ward, Hon. George (Worcester)


Hylton-Foster, H. B.
Orr-Ewing, Ian L. (Weston-super-Mare)
Ward, Miss I. (Tynemouth)


Jennings, R.
Osborne, C.
Waterhouse, Capt. Rt. Hon. C.


Johnson, Howard (Kemptown)
Peake, Rt. Hon. O.
Watkinson, H.


Jones, A. (Hall Green)
Perkins, W. R. D.
Webbe, Sir H. (London &amp; Westminster)


Joynson-Hicks, Hon. L. W.
Peto, Brig. C. H. M.
Wheatley, Maj. M. J. (Poole)


Kaberry, D.
Pickthorn, K.
White, Baker (Canterbury)


Kerr, H. W. (Cambridge)
Pitman, I. J.
Williams, Charles (Torquay)


Kingsmill, Lt.-Col. W. H.
Powell, J. Enoch
Williams, Gerald (Tonbridge)


Lambert, Hon. G.
Price, Henry (Lewisham, W.)
Williams, Sir Herbert (Croydon, E.)


Lancaster, Col. C. G.
Prior-Palmer, Brig. O.
Wills, G.


Langford-Holt, J.
Profumo, J. D.
Wilson, Geoffrey (Truro)


Law, Rt. Hon. R. K.
Raikes, H. V.
Winterton, Rt. Hon. Earl


Leather, E. H. C.
Rayner, Brig. R.
Wood, Hon. R.


Legge-Bourke, Maj. E. A. H.
Redmayne, M.
York, C.


Lennox-Boyd, A. T.
Remnant, Hon. P.



Lindsay, Martin
Renton, D. L. M.
TELLERS FOR THE NOES:


Linstead, H. N.
Roberts, Maj. Peter (Heeley)
Major Conant and Mr. Digby.

Clause 33.—(SALES, ETC. BETWEEN ASSOCIATED PERSONS.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Eccles: My hon. Friends and I do not desire to move our Amendment in page 26, line 8, at the end, to insert:
and
(c) that price is not reasonable in all the circumstances.

It may be for the convenience of the Committee if I say that we have three subsequent Amendments, in line 11, to leave out "shall," and to insert:
may if the Commissioners so direct,
in line 17, to leave out from "therein," to the end of line 19, and in page 27, line 14, to leave out subsection (6), which we understand that the Chair has been good enough to select. In order to make


progress with the Bill we do not propose to move these Amendments tonight, but we hope that we shall have a chance to put them down on Report stage and that in the meantime the Government will give them full consideration, because they are important Amendments.

Mr. Logan: On a point of order, Sir Charles. Yesterday the ruling was quite contrary to that. It was stated by the Chair yesterday that if Amendments were taken collectively they all fell if one fell. What is the ruling to be now?

The Deputy-Chairman: The hon. Member misunderstands the position. None of the Amendments is being moved. We are now on the Question of the Clause standing part of the Bill.

10.45 p.m.

Mr. Eccles: This is another bad Clause, and we shall have to object to it strongly. The clue to this Clause is in subsection (6), which provides that Rule 7 of the General Rules of Income Tax shall cease to have effect. General Rule 7 of the Income Tax Act of 1918 deals with the assessment of a resident person as agent of a non-resident, where the latter has control over the former and business arrangements between them are so arranged that the resident makes less profit than he might be expected to earn. This enables the full tax to be assessed on the resident on his own account. That seems a pretty stiff rule to deal with possible evasion of tax by those outside the Kingdom having business dealings through agents inside the Kingdom.
But in the Government's view that is no longer enough to prevent the un-attractiveness of doing business in this country, now that we have the level of taxation imposed by the Socialists, requiring something stiffer. This Clause is clearly inserted into the Bill in order to give another turn to the screw. The Clause is needed, like the previous Clause, because there are only two ways to counter the centrifugal effects of Socialist taxation. One can stop, or try to stop, companies and persons taking their businesses away from Socialist Britain in one of two ways. Either one can reduce the rate of taxation in this country and persuade them to stay here of their own accord—which is what we on this side

of the Committee would do—or one must impose fines and imprisonment.
The Chancellor of the Exchequer has said that because the Opposition did not vote against the rise in Income Tax and Profits Tax it must accept the coercive alternative, and that that is the reason for this Clause. Our reply is that if we had charge of the expenditure side of the Budget a very different situation would arise, and it would no longer be necessary for coercive Clauses to be put into the Bill.
This particular Clause deals with sales between associated persons, one inside this country and the other outside, and, of course, largely between a company here and a company abroad over which it has control, or the other way round. It seeks to substitute, in computing taxation liabilities, the price at which the sale would have been expected to take place at arm's length for the price at which the sale was in fact made. In other words, if a United Kingdom company sold something too cheaply to a foreign company—that is, too cheaply in the eyes of the Treasury—the Treasury will fix the price at some higher level for the purpose of taxation. This strikes at the roots of much of the established methods of doing business overseas.
Let me take an instance with which hon. Gentlemen opposite must be familiar. If one is starting a branch shop in a new area, it is frequently the practice to sell goods cheap, from the central depot to that particular branch shop so that it may win customers by offering attractive prices while the branch is getting on to its feet. That is a method which has often been used to great advantage in establishing British goods in new markets.
I do not doubt for a moment that in the dollar drive many British manufacturing companies will be found deliberately, and quite rightly, selling goods to the United States of America too cheap, to start with, so as to get into a market where they had not been before. Now they are struck at by this Clause. Is there any hon. Member opposite who has knowledge of the Co-op.? If so, he will know that the Co-operative Societies use precisely this method for breaking into a new territory when establishing a branch.

Mr. Nally: The hon. Gentleman cannot really get away with that. One of my


criticisms, as a Co-op member, is that this is precisely a tactic which the Co-op does not adopt. I will undertake to produce a whole list of illustrations where Co-operative Societies have opened branches in new areas and the boards of directors have ruled that they should not offer industrial cut-price lines. Let the hon. Gentleman see me and I will give him examples.

Mr. Eccles: In order not to delay the Committee I will meet the hon. Member at some suitable time afterwards; but multiple shops have always done something of this sort to establish themselves in new areas. But, be that as it may, the Committee must agree that, when entering a new market overseas, not to be allowed to sell something cheaply in the first instance is an absurd prohibition.
There is this extra point. It is very difficult for anyone to say what price ought to be charged. Take, for instance, a motorcar shipped abroad in parts to be assembled in the foreign country by an assembly plant which may or may not be owned by the manufacturing company here. What is the right price for the parts which are being sent abroad? How is the Treasury to compute what the price of a broken-down motor car ought to be? It is an impossible demand.
Now let us turn to the other class of transactions—the sales of shares. On a previous Clause to this Bill I mentioned that it is very common, and very necessary, when developing risky enterprises, to say to those who take the first bite at the cherry—those who put their money out at a time when it is quite uncertain whether the concern will reach the profitable stage—that, if successful, they can have another allotment of shares at a price fixed at the first issue.
If the business is successful the price goes up and the associates get their second allotment at a price below the market. Why not? It is one of the ways for inducing people to take on propositions for which no certain returns exist, and that is how our overseas affairs have been arranged. In Queen Elizabeth's Reign, when men like Drake set off round the world, people put up money knowing that if he found treasure they would make a large profit. There has to be some prize of that kind in a risky business, and a common method of doing it is struck at in this Clause.
We owe this Clause to oppressive taxation. One can imagine transactions of the kind aimed at which will dodge a certain 3mount of tax, but here again, as on previous occasions while we have discussed this Bill, I ask "Is the price worth paying?" A vast range of transactions are here brought within the ambit of the Treasury, for the Clause makes it mandatory upon the Treasury to look into all sales between a company here and a company overseas. The Treasury cannot say, "This man is really worth going after; he has done something bad, and has evaded a great deal of tax." Not at all. As the Clause is drafted, they must go after every single person and every single transaction.
One can see what an amount of work is coming into the Treasury if they are to inspect the price of pretty well everything that is sold by a company here to a subsidiary company overseas. It really passes one's imagination how we can be governed in a country whose whole life depends upon industry and trade by right hon. Gentlemen who introduce a Clause like this which so clearly strikes at a normal and widespread practice of business and will put at the mercy of the Treasury every export which is made to an associated company.

The Attorney-General: I shall reply very shortly to the speech to which we have just listened. The Clause deals with a form of tax avoidance which certainly does exist and which again threatens to assume great proportions. Stock is transferred by a United Kingdom company to a subsidiary abroad, with the result that the profit which should have come to the United Kingdom does not do so. The Clause deliberately excludes the case in which a buyer and seller are retained in the United Kingdom with the result that, in the case of the buyer or seller, the profit which should be made upon a disposal of the stock at its true price is brought into account.
With regard to the difficulty of assessing prices, that is very far from insurmountable. The conception of an arms-length price arrived at by persons acting independently of one another is one which should not be unduly difficult to interpret in terms of £.s.d., and it is upon that basis of price that the Clause works. Certainly, the Clause acts automatically, but its effect, broadly speaking, is to


bring into the taxation net cases where that profit is not subjected to tax but where it clearly exists and by rights ought to be brought into the taxation scheme.

Mr. Lyttelton: I am really amazed by the reply of the right hon. and learned Gentleman. It really shows that, whatever the legal implications are, he has no idea of the administrative complexities which will be raised by this Clause. I am afraid, even at this hour, that I must ask the Committee to bear with me in giving instances of what I mean, which are familiar to all of us who have established businesses overseas.
I am thinking of my own experience of two Indian manufacturing businesses controlled by my company. These questions arise, and I would ask the Committee to remember that they have to be resolved by the Treasury, and every day that goes by it becomes more and more clear that the Treasury Department knows nothing about business. What happens is that a power station is erected in India. A lot of the heavy plant has to be supplied from here. The question arises all through as to what price the controlling company in England is to supply a subsidiary company in India.
The first thing is, is it to be at factory cost, or is it at factory cost plus overheads—I cannot get any answer because the Treasury do not know—or is it at factory cost, plus overhead expenses, plus interest on the money during the period of shipment? It is no good the Attorney-General saying that anyone can answer this. It means we shall get a committee set-up by the Treasury who will then say they will not give any reason for their decision. The next thing is that they will rapidly collect a staff of 500 or 600 chartered accountants who cannot obtain employment elsewhere, and then will set themselves down to try to solve these questions, which are at the moment a matter of the greatest delicacy. I assure the right hon. and learned Gentleman that one cannot build up a business overseas except by supplying some of the mass-production components from this country at very cut prices.
11.0 p.m.
If I was selling components to an Indian factory at a cost other than that

at which I supplied them to a British customer, I should fall within the mischief of the Clause. The thing is just another instance of the complete disregard of all business considerations. Provided that the hon. Member for Sowerby (Mr. Houghton) can be satisfied that somebody is evading tax, he will accept any damage to the country's trade.
This simply will not do. The thing is complete nonsense from top to bottom. I hope that the Treasury will look at the Amendments which have been put down in the name of my hon. Friend the Member for Chippenham (Mr. Eccles) and others and will study whether they will not do something to improve the Clause. We have already told the Committee that we do not propose to move them tonight, but I am beginning rather to regret that. [HON. MEMBERS: "Go ahead."] Certainly; if hon. Members opposite wish to go on all night, I am quite willing. [Interruption.] The Deputy-Leader of the House, apparently, wishes me to expand my argument, but I am not going to succumb to the temptation. But he does it so nicely and in so persuasive a way, and has such a vast knowledge of overseas business, that I am almost obliged to turn aside and develop the argument for the next half-hour or so.
However, as I have always been able to resist temptation, and I will simply summarise my remarks by saying that the Attorney-General, famous in this Committee for his courtesy and untiring devotion to his duty, has given an answer so perfunctory as not to make it possible for us to develop the argument. Unless the Treasury make great changes in this Clause, they will once more be burying their heads in the sand. For the sake of catching one or two exceptional cases of tax evasion, they will retard the expansion of our assets overseas and do great damage to British trade.

Mr. Selwyn Lloyd: This matter has been dealt with in such a perfunctory manner by the Attorney-General that I wish as briefly as I can to put another aspect of this matter before him. I have with me a memorandum which has been sent to me by a company, whose name I will not mention. It is a United Kingdom public company. The majority of the shares are held by an American company, but a number of them are held


in the United Kingdom and are quoted on the London Stock Exchange.
The company's business is the manufacture of machines used by boot and shoe manufacturers. It supplies some 80 to 90 per cent. of the machines so used in the United Kingdom, and it also sells a number of other accessories. It has a considerable export trade, either through its own subsidiary companies or through subsidiaries of the American parent company.
Under agreements and following the practice of many years past, business between the company, the American parent company, and the subsidiaries of both, has been done on a costs basis, and the benefits to the United Kingdom from these practices have been very considerable. It must be pretty obvious to most hon. Members what those benefits would be. Exports in highly specialised machines and other products have been fostered. The increase in the total quantities of each model manufactured here tends to reduce the prices to United Kingdom manufacturers. Thirdly, the company can acquire at cost price, either as prototypes or for marketing here, machines produced by the American company or by other subsidiaries.
Therefore, this arrangement, which I do not believe is at all uncommon, has meant considerable savings in dollar currency to this country. These arrangements were never designed to avoid taxation; they have been entered into in order to promote international trade. As a result of the action which the Government propose to take, I assume that all the transactions of that group of companies will be reviewed by the Treasury.
What will be the effect of that? I should think it is perfectly obvious that the overseas subsidiaries of the parent company will no longer purchase anything from this country. They are going to get their machines from one of the other subsidiaries or from the parent company itself in America. The Dominion subsidiaries will be encouraged to expand their business at the expense of the company which is registered in this country. If this company has to pay full market value for the prototypes and machines imported from America, then of course that will affect the dollar balance.
The operation of this Clause is going to cause serious detriment to the employment

and industry of this country. Hon. Members opposite who claim to represent the wage-earners should think twice before letting this sort of Clause go through. It really is absolutely undiluted nonsense for the Government to put forward this Clause at all. It will cut across every sort of transaction to which I have been referring. I believe the ultimate cost to this country will be infinitely greater than the small loss to the Revenue that may occur in particular cases.

Sir Ian Fraser: May I ask the Attorney-General if the penalties involved in this Clause would apply in a situation such as this. Suppose one has in a Dominion country a parent company and over here a subsidiary company wholly owned by that parent company. The subsidiary company is in the City of London and acts as a buying agent for the company in the Dominions, undertaking all the purchases that it requires from this British market? Supposing part of the arrangement was that a different rate would be charged to the subsidiary here in London by its parent and that it would charge at arm's length upon the open market. Would such an arrangement fall under the penalties of this Clause, because there are very many cases in which companies overseas find it convenient to have a London office taking the form of a subsidiary company?
If, in fact, such an arrangement is to be penalised, nothing would be easier than for the overseas company to liquidate its London office and do its business elsewhere, either in another capital or through another arrangement. Therefore, nothing would be gained by the Treasury, except that they would have caused a very great inconvenience to those who like to use the City of London for shipping and insuring and who like to buy from British manufacturers.

The Attorney-General: I replied rather shortly because I was under the apprehension that probably further discussion of the Clause would take place at a later stage of our deliberations. That is why I communicated in brief form the general purpose and object of the Clause.
I accept that it is not easy always—and sometimes it is extremely difficult—to assess what is meant by "arm's length prices." Stock is sent at or under cost


and at different rates of commission, which it is difficult to know exactly, from one foreign company to another company. In those cases of considerable difficulty I think I said that they would have been insurmountable. But the prices could be calculated, and it would be perfectly possible to take into account the factors which might influence prices in order to arrive at a figure which would be the figure at which two persons dealing at arm's length would fix upon as the price.
I certainly did not mean to convey the impression that it would be perfectly easy to arrive at a price which would conform to the formula. In the generality of cases it may be difficult; experience will tell. In many cases of which we know it is a simple case of a sale of stock which stands in the books as x £s, at a price in £.s.d. which is x minus y. The difference is easily ascertainable by a simple process of deduction. In that kind of case there is no difficulty. I am not saying that the application of this Clause in all cases will be one which does not raise fairly complicated problems. I have no doubt that in the case cited by the right hon. Gentleman it would be difficult to calculate the proper basis of the price and what factors should be taken into consideration. The hon. Member for Chippenham (Mr. Eccles) indicated, perhaps rather more fully than I did, some of the difficulties which he felt, and I replied by stating what was at any rate the general idea of the Clause.
As the hon. Gentleman said, it is always a question of whether we should take steps to bring a particular type of transaction within the tax net, or whether it is too difficult to do so and whether the cost would be too great. But we feel that the transactions which have come to our notice are such that they require that we should take some definite action to stop them, because they are a potential source of increasing loss of revenue to the Inland Revenue.
That is why we have embodied this Clause in this Bill. I have endeavoured to indicate only the outline of why we have done it and what is the general object of it, as there will no doubt be later discussions in which reference will be made to the Clause in more detail.

Sir I. Fraser: What of the kind of transaction about which I inquired?

The Attorney-General: It depends on the precise nature of the business. There has to be a sale, and if the sale was between the parent company and the subsidiary the Clause would operate. If it was simply a case of one company consigning goods to another as agent to sell, or a contract to sell between the parent company and a third party, the Clause would not operate.

Mr. Lyttelton: I must carry this a little further, because it is still obvious that the Treasury Bench have no idea of what they are letting themselves in for. The Attorney-General quite properly said that the only transaction on which it was possible to calculate the differential was where stock was sold or proposed to be sold in this country. But that does not get us any further. What we want to know, having calculated that, is whether it will fall within this Clause? That is the point. Supposing I sell at cost, without deducting any profit, a number of components to an Indian Company. Is that coming within this Clause? Of course it is. The only transaction which lies outside this Clause is a transaction which can be proved to be at international parity after the deduction of shipping costs and at the appropriate rate of exchange.
If it could be shown that I am selling to the British Railways parts for a diesel locomotive at x price and supplying my Indian company with the same parts at the same price f.o.b. I should find myself hounded by the Treasury if I made no deduction for not making the profit I should have made if I were a Treasury blue-eyed boy. It is difficult to know exactly what price ought to be charged.
I regret very much ever having attempted to build up a business in India. I shall have to keep two or three officials permanently residing at the Treasury to find out what I am to do. They will have to build a hostel which will include a dormitory—in which the hon. Member for Bilston (Mr. Nally) will no doubt lie down occasionally—while they find out whether I am liable to a £10,000 fine or two years as a guest of His Majesty. The thing is utterly impossible.
The Government reply only deepens my anxiety. I beg the Chancellor to look at this again. There is no other way to remedy it except by tearing up the Clause


and beginning again; and if he wishes to obtain some guidance in the way he should go he should study the Amendments we have put down.

11.15 p.m.

Mr. Nally: It may be 11 a.m., or 11 a.m., but I see no reason why we on this side of the Committee should stand for the juvenile wisecracks of the right hon. Gentleman on a matter of some importance. It will be noticed in HANSARD tomorrow how the right hon. Gentleman referred to what he did in India and in this country, and it was rather noticeable that in the four references he made to the companies with which he is associated he used the personal pronoun. The truth of the matter is that the right hon. Gentleman has really no business at this time of night to get up and say the sort of thing he did, unless he and the Opposition are prepared to pursue the Amendments they have put down. No matter what arrangements have been made between the two sides, the right hon. Gentleman should pursue his Amendments, and I am not prepared—

Hon. Members: I!

The Deputy-Chairman: Order, order. I really cannot hear what the hon. Gentleman is saying.

Mr. Nally: I thought it was an elementary assumption in the House that we were all equal, even the youngest of us, despite our varied capabilities. Speaking as an individual Member, it seems to me a quite improper arrangement, and after the speech of the right hon. Gentleman and the phrases he used about what is embodied in the Clause the Government are espousing, I conceive it to be the duty of the Opposition to press all their Amendments.

Mr. Lyttelton: The hon. Gentleman appears not only to be acting as Deputy-Leader of the House but also to be leading the Opposition. I must warn him against the very heavy load of responsibility he is assuming.

Mr. Nally: The right hon. Gentleman has made an accusation that he ought to withdraw. I have a certain measure of good taste, and the one ambition I certainly have never had is to become that. If the right hon. Gentleman believes in what he is saying—and he spoke in terms of what might be described as those of an elevated and honest barrow-boy—he ought logically to pursue each Amendment.

Mr. Martin Lindsay: On a point of order. Is the hon. Gentleman in order in calling the right hon. Gentleman an "elevated barrow-boy?"

The Deputy-Chairman: I did not hear the hon. Gentleman.

Mr. Nally: I said "elevated and honest." If the right hon. Gentleman believes everything he has said, then he has no alternative but to proceed with the Amendments. If he does not do so, I can only assume that the Opposition are completely insincere about this Clause, and that in the sort of arrangements that have been made tonight about the order of Business the Committee will be presented to the country as being completely dishonest.

The Attorney-General: May I bring the debate back to the Clause? The right hon. Gentleman has obviously pointed to difficulties of importance. It had been the intention of the Committee earlier to discuss these Amendments one by one. They will be discussed at a later date, and we can then go thoroughly into the details of the Clause and investigate the difficulties. We feel that this Clause is one we cannot do without. It is essential to deal with certain types of tax evasion, but at a later stage we will have to give serious consideration to the difficulties that have been pointed out.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 302; Noes, 282.

Division No. 135.]
AYES
[11.20 p.m.


Acland, Sir Richard
Bacon, Miss Alice
Bing, G. H. C.


Adams, Richard
Baird, J.
Blenkinsop, A.


Albu, A. H.
Balfour, A.
Blyton, W. R.


Allen, Arthur (Bosworth)
Barnes, Rt. Hon. A. J.
Boardman, H.


Allen, Scholefield (Crewe)
Bartley, P.
Booth, A.


Anderson, Alexander (Motherwell)
Bellenger, Rt. Hon. F. J.
Bottomley, A. G.


Anderson, Frank (Whitehaven)
Benn, Wedgwood
Bowden, H. W.


Allies, Rt. Hon. C. R.
Benson, G.
Bowles, F. G. (Nuneaton)


Awbery, S. S.
Beswick, F.
Brook, Dryden (Halifax)


Ayles, W. H.
Bevan, Rt. Hon. A. (Ebbw Vale)
Brooks, T. J. (Normanton)




Broughton, Dr. A. D. D.
Hargreaves, A.
Neal, Harold (Bolsover)


Brown, Rt. Hon. George (Belper)
Hastings, S.
Noel-Baker, Rt. Hon. P. J.


Brown, Thomas (Ince)
Hayman, F. H.
O'Brien, T.


Burke, W. A.
Henderson, Rt. Hn. Arthur (Tipton)
Oldfield, W. H.


Burton, Miss E.
Herbison, Miss M.
Oliver, G. H.


Butler, Herbert (Hackney, S.)
Hewitson, Capt. M.
Orbach, M.


Carmichael, J.
Hobson, C. R.
Padley, W. E.


Castle, Mrs. B. A
Holman, P.
Paling, Rt. Hon. Wilfred (Dearne V'lly)


Champion, A. J.
Holmes, Horace (Hemsworth)
Paling, Will T. (Dewsbury)


Chetwynd, G. R.
Houghton, D.
Pannell, T. C.


Clunie, J.
Hoy, J.
Pargiter, G. A.


Cocks, F. S.
Hubbard, T.
Parker, J.


Coldrick, W.
Hudson, James (Ealing, N.)
Paton, J.


Collick, P.
Hughes, Emrys (S. Ayrshire)
Pearson, A.


Collindridge, F.
Hughes, Hector (Aberdeen, N.)
Peart, T. F.


Cook, T. F.
Hynd, H. (Accrington)
Porter, G.


Cooper, Geoffrey (Middlesbrough, W.)
Hynd, J. B. (Attercliffe)
Price, Philips (Gloucestershire, W.)


Cooper, John (Deptford)
Irvine, A. J. (Edge Hill)
Proctor, W. T.


Corbet, Mrs. Freda (Peckham)
Irving, W. J. (Wood Green)
Pryde, D. J.


Cove, W. G.
Isaacs, Rt. Hon G. A.
Pursey, Cmdr. H.


Craddock, George (Bradford, S.)
Janner, B.
Rankin, J.


Crawley, A.
Jay, D. P. T.
Rees, Mrs. D.


Crosland, C. A. R.
Jeger, George (Goole)
Reeves, J.


Crossman, R. H. S.
Jeger, Dr. Santo (St. Pancras, S.)
Reid, Thomas (Swindon)


Cullen, Mrs. A.
Jenkins, R. H.
Raid, William (Camlachie)


Daines, P.
Johnson, James (Rugby)
Rhodes, H.


Dalton, Rt. Hon. H.
Johnston, Douglas (Paisley)
Richards, R.


Darling, George (Hillsborough)
Jones, David (Hartlepool)
Robens, Rt. Hon. A.


Davies, A. Edward (Stoke, N.)
Jones, Frederick Elwyn (W. Ham, S.)
Roberts, Emrys (Merioneth)


Davies, Rt. Hon. Clement (Montgomery)
Jones, Jack (Rotherham)
Roberts, Goronwy (Caernarvonshire)


Davies, Harold (Leek)
Jones, William Elwyn (Conway)
Robertson, J. J. (Berwick)


Davies, Stephen (Merthyr)
Keenan, W.
Robinson, Kenneth (St. Pancras, N.)


de Freitas, Geoffrey
Kenyan, C.
Rogers, George (Kensington, N.)


Deer, G.
Key, Rt. Hon. C. W.
Ross, William


Dodds, N. N.
King, Dr. H. M.
Royle, C.


Donnelly, D.
Kinghorn, Sqn. Ldr. E.
Shackleton, E. A. A.


Driberg, T. E. N.
Kinley, J.
Shawcross, Rt. Hon. Sir Hartley


Dugdale, Rt. Hon. J. (W. Bromwich)
Lang, Gordon
Shinwell, Rt. Hon. E.


Dye, S.
Lee, Frederick (Newton)
Shurmer, P. L. E.




Silverman, Julius (Erdington)


Ede, Rt. Hon. J. C.
Lee, Miss Jennie (Cannock)
Silverman, Sydney (Nelson)


Edelman, M.
Lever, Harold (Cheetham)
Simmons, C. J.


Edwards, John (Brighouse)
Lever, Leslie (Ardwick)
Slater, J.


Edwards Rt. Hon. Ness (Caerphilly)
Lewis, Arthur (West Ham, N.)
Smith, Ellis (Stoke, S.)


Edwards, W. J. (Stepney)
Lewis, John (Bolton, W.)
Smith, Norman (Nottingham, S.)


Evans, Albert (Islington, S. W.)
Lindgren, G. S.
Snow, J. W.


Evans, Edward (Lowestoft)
Lipton, Lt.-Col. M.
Sorensen, R. W.


Evans, Stanley (Wednesbury)
Logan, D. G.
Soskice, Rt. Hon Sir Frank


Ewart, R.
Longden, Fred (Small Heath)
Sparks, J. A.


Fernyhough, E.
McAllister, G.
Steele, T.


Field, Capt. W. J.
MacColl, J. E.
Stewart, Michael (Fulham, E.)


Finch, H. J.
Macdonald, A. J. F. (Roxburgh)
Stokes, Rt. Hon. R. R.


Fletcher, Eric (Islington, E.)
McGhee, H. G.
Strachey, Rt. Hon. J.


Follick, M.
McGovern, J.
Strauss, Rt. Hon. George (Vauxhall)


Foot, M. M.
McInnes, J.
Stross, Dr. Barnett


Forman, J. C.
Mack, J. D.
Summerskill, Rt. Hon. Edith


Fraser, Thomas (Hamilton)
McKay, John (Wallsend)
Sylvester, G. O.


Freeman, John (Watford)
Mackay, R. W. G. (Reading, N.)
Taylor, Bernard (Mansfield)


Freeman, Peter (Newport)
McLeavy, F.
Taylor, Robert (Morpeth)


Gaitskell, Rt. Hon. H. T. N.
MacMillan, Malcolm (Western Isles)
Thomas, David (Aberdare)


Ganley, Mrs. C. S.
McNeil, Rt. Hon. H.
Thomas, George (Cardiff)


George, Lady Megan Lloyd
MacPherson, Malcolm (Stirling)
Thomas, Iorwerth (Rhondda, W.)


Gibson, C. W.
Mainwaring, W. H.
Thomas, Ivor Owen (Wrekin)


Gilzean, A.
Mallalieu, E. L. (Brigg)
Thorneycroft, Harry (Clayton)


Glanville, James (Consett)
Mallalieu, J. P. W. (Huddersfield, E.)
Thurtle, Ernest


Gooch, E. G.
Mann, Mrs. Jean
Timmons, J.


Gordon-Walker, Rt. Hon. P. C.
Manuel, A. C.
Tomney, F.


Granville, Edgar (Eye)
Marquand, Rt. Hon. H. A.
Turner-Samuels, M.


Greenwood, Anthony (Rossendale)
Mathers, Rt. Hon. G.
Ungoed-Thomas, Sir Lynn


Greenwood, Rt. Hn. Arthur (Wakefield)
Mellish, R. J.
Usborne, H.


Grenfell, Rt. Hon. D. R.
Messer, F.
Vernon, W. F.


Grey, C. F.
Middleton, Mrs. L.
Viant, S. P.


Griffiths, David (Rother Valley)
Mikardo, Ian.
Wade, D. W.


Griffiths, Rt. Hon. James (Llanelly)
Mitchison, G. R.
Wallace, H. W


Griffiths, William (Exchange)
Moeran, E. W.
Watkins, T. E.


Grimond, J.
Monslow, W.
Webb, Rt. Hon M. (Bradford, C.)


Gunter, R. J.
Moody, A. S.
Weitzman, D.


Hale, Joseph (Rochdale)
Morgan, Dr. H. B.
Wells, Percy (Faversham)


Hale, Leslie (Oldham, W.)
Morley, R.
Wells, William (Walsall)


Hall, Rt. Hon. Glenvil (Colne Valley)
Morris, Percy (Swansea, W.)
West, D. G.


Hall, John (Gateshead, W.)
Morrison, Rt. Hon. H. (Lewisham. S.)
Wheatley, Rt. Hon. John (Edinb'gh E.)


Hamilton, W. W.
Mort, D. L.
White, Mrs. Eirene (E. Flint)


Hannan, W.
Moyle, A.
White, Henry (Derbyshire, N.E.)


Hardman, D. R.
Mulley, F. W.
Whiteley, Rt. Hon. W.


Hardy, E. A.
Nally, W.
Wigg, G.







Wilcock, Group Capt. C. A. B.
Williams, Ronald (Wigan)
Woodburn, Rt. Hon. A.


Wilkes, L.
Williams, Rt. Hon. Thomas (Don V'lly)
Woods, Rev. G. S.


Wilkins, W. A.
Williams, W. T. (Hammersmith, S.)
Wyatt, W. L.


Willey, Frederick (Sunderland)
Wilson, Rt. Hon. Harold (Huyton)
Yates, V. F.


Willey, Octavius (Cleveland)
Winterbottom, Ian (Nottingham, C.)
Younger, Rt. Hon. K.


Williams, David (Neath)
Winterbottom, Richard (Brightside)



Williams, Rev. Llywelyn (Abertillery)
Wise, F. J.
TELLERS FOR THE AYES:




Mr. Popplewell and Mr. Delargy.




NOES


Aitken, W. T.
Duthie, W. S.
Lloyd, Rt. Hon. G. (King's Norton)


Alport, C. J. M.
Eccles, D. M.
Lloyd, Maj. Guy (Renfrew, E.)


Amery, Julian (Preston, N.)
Eden, Rt. Hon. A.
Lloyd, Selwyn (Wirral)


Amory, Heathcoat (Tiverton)
Erroll, F. J.
Lockwood, Lt.-Col. J. C.


Arbuthnot, John
Fisher, Nigel
Longden, Gilbert (Herts, S. W.)


Ashton, H. (Chelmsford)
Fort, R.
Low, A. R. W.


Assheton, Rt. Hon. R. (Blackburn, W.)
Foster, John
Lucas, Sir Jocelyn (Portsmouth, S.)


Astor, Hon. M. L.
Fraser, Hon. Hugh (Stone)
Lucas, P. B. (Brentford)


Baker, P. A. D.
Fraser, Sir Ian (Morecambe &amp; Lonsdale)
Lucas-Tooth, Sir Hugh


Baldock, Lt.-Cmdr. J. M.
Fyfe, Rt. Hon. Sir David Maxwell
Lyttelton, Rt. Hon. O.


Baldwin, A. E.
Gage, C. H.
McAdden, S. J.


Banks, Col. C.
Galbraith, Cmdr. T. D. (Pollok)
McCorquodale, Rt. Hon. M. S.


Baxter, A. B.
Galbraith, T. G. D. (Hillhead)
Macdonald, Sir Peter (I. of Wight)


Beamish, Maj. Tufton
Gammans, L. D.
Mackeson, Brig. H. R.


Bell, R. M.
Garner-Evans, E. H. (Denbigh)
McKibbin, A.


Bennett, Sir Peter (Edgbaston)
Gates, Maj. E. E.
McKie, J. H. (Galloway)


Bennett, Dr. Reginald (Gosport)
Glyn, Sir Ralph
Maclay, Hon. John


Bennett, William (Woodside)
Gomme-Duncan, Col. A.
Maclean, Fitzroy


Bevins, J. R. (Liverpool, Toxteth)
Gridley, Sir Arnold
MacLeod, Iain (Enfield, W.)


Birch, Nigel
Grimston, Hon. John (St. Albans)
MacLeod, John (Ross and Cromarty)


Bishop, F. P.
Grimston, Robert (Westbury)
Macmillan, Rt. Hon Harold (Bromley)


Black, C. W.
Harden, J. R. E.
Macpherson, Major Niall (Dumfries)


Boles, Lt.-Col. D. C. (Wells)
Hare, Hon. J. H. (Woodbridge)
Maitland, Cmdr. J. W.


Boothby, R.
Harris, Frederic (Croydon, N.)
Manningham-Buller, R. E.


Bossom, A. C.
Harris, Reader (Heston)
Marlowe, A. A. H.


Boyd-Carpenter, J. A.
Harvey, Air Cdre. A. V. (Macclesfield)
Marples, A. E.


Boyle, Sir Edward
Harvey, Ian (Harrow, E.)
Marshall, Douglas (Bodmin)


Bracken, Rt. Hon. B.
Harvie-Watt, Sir George
Maude, Angus (Ealing, S.)


Braine, B. R.
Hay, John
Maude, John (Exeter)


Braithwaite, Sir Albert (Harrow, W.)
Head, Brig. A. H.
Maudling, R.


Braithwaite, Lt.-Cr. G. (Bristol, N. W.)
Headlam, Lt.-Col. Rt. Hon. Sir Cuthbert
Medlicott, Brig. F


Bromley-Davenport, Lt.-Col. W.
Heald, Lionel
Mellor, Sir John


Brooke, Henry (Hampstead)
Heath, Edward
Molson, A. H. E.


Browne, Jack (Govan)
Henderson, John (Cathcart)
Monckton, Sir Walter


Buchan-Hepburn, P. G. T.
Hicks-Beach, Maj. W. W.
Moore, Lt.-Col. Sir Thomas


Bullock, Capt. M.
Higgs, J. M. C.
Morrison, John (Salisbury)


Bullus, Wing Commander E. E.
Hill, Dr. Charles (Luton)
Morrison, Rt. Hon W. S. (Cirencester)


Burden, F. A.
Hill, Mrs. E. (Wythenshawe)
Mott-Radclyffe, C. E.


Butcher, H. W.
Hinchingbrooke, Viscount
Nabarro, G.


Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)
Hirst, Geoffrey
Nicholls, Harmar


Carr, Robert (Mitcham)
Hollis, M. C.
Nicholson, G.


Carson, Hon. E.
Holmes, Sir Stanley (Harwich)
Nield, Basil (Chester)


Channon, H.
Hope, Lord John
Noble, Cmdr. A. H. P.


Churchill, Rt. Hon. W. S.
Hopkinson, Henry
Nugent, G. R. H.


Clarke, Col. Ralph (East Grinstead)
Hornsby-Smith, Miss P.
Nutting, Anthony


Clarke, Brig. Terence (Portsmouth, W.)
Horsbrugh, Rt. Hon. Florence
Oakshott, H. D.


Clyde, J. L.
Howard, Gerald (Cambridgeshire)
Odey, G. W.


Colegate, A.
Howard, Greville (St. Ives)
O'Neill, Rt. Hon. Sir Hugh


Cooper, Sqn. Ldr. Albert (Ilford, S.)
Hudson, Sir Austin (Lewisham, N.)
Ormsby-Gore, Hon. W. D.


Cooper-Key, E. M.
Hudson, Rt. Hon. Robert (Southport)
Orr, Capt. L. P. S.




Orr-Ewing, Charles Ian (Hendon, N.)


Corbett, Lt.-Col. Uvedale (Ludlow)
Hudson, W. R. A. (Hull, N.)
Orr-Ewing, Ian L. (Weston-super-Mare)


Craddock, Beresford (Spelthorne)
Hurd, A. R.
Osborne, C.


Cranborne, Viscount
Hutchinson, Geoffrey (Ilford, N.)
Peake, Rt. Hon. O.


Crookshank, Capt. Rt. Hon. H. F. C.
Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Perkins, W. R. D.


Crosthwaite-Eyre, Col. O. E.
Hutchison, Col. James (Glasgow)
Peto, Brig. C. H. M.


Crouch, R. F.
Hyde, Lt.-Col. H. M.
Pitman, I. J.


Crowder, Capt. John (Finchley)
Hylton-Foster, H. B.
Powell, J. Enoch


Crowder, Petre (Ruislip—Northwood)
Jennings, R.
Price, Henry (Lewisham, W.)


Cundiff, F. W.
Johnson, Howard (Kemptown)
Prior-Palmer, Brig. O.


Cuthbert, W. N.
Jones, A. (Hall Green)
Profumo, J. D.


Darling, Sir William (Edinburgh, S.)
Joynson-Hicks, Hon. L. W.
Raikes, H. V.


Davidson, Viscountess
Kaberry, D.
Rayner, Brig. R.


Davies, Nigel (Epping)
Kerr, H. W. (Cambridge)
Redmayne, M.


de Chair, Somerset
Kingsmill, Lt.-Col. W. H.
Remnant, Hon. P.


De la Bère, R.
Lambert, Hon. G.
Renton, D. L. M.


Deedes, W. F.
Lancaster, Col. C. G.
Roberts, Maj. Peter (Heeley)


Dodds-Parker, A. D.
Langford-Holt, J.
Robertson, Sir David (Caithness)


Donner, P. W.
Law, Rt. Hon. R. K.
Robinson, Roland (Blackpool, S.)


Douglas-Hamilton, Lord Malcolm
Leather, E. H. C.
Robson-Brown, W.


Drayson, G. B.
Legge-Bourke, Maj. E. A. H.
Rodgers, John (Sevenoaks)


Drewe, C.
Lennox-Boyd, A. T.
Roper, Sir Harold


Dugdale, Maj. Sir T. (Richmond)
Lindsay, Martin
Ropner, Col. L.


Duncan, Capt. J. A. L.
Linstead, H. N.
Russell, R. S.


Dunglass, Lord
Llewellyn, D.
Ryder, Capt. R. E. D.







Salter, Rt. Hon. Sir Arthur
Studholme, H. G.
Wakefield, Sir Wavell (Marylebone)


Sandys, Rt. Hon D.
Summers, G. S.
Walker-Smith, D. C.


Savory, Prof. D. L.
Sutcliffe, H.
Ward, Hon. George (Worcester)


Scott, Donald
Taylor, Charles (Eastbourne)
Ward, Miss I. (Tynemouth)


Shepherd, William
Taylor, William (Bradford, N.)
Waterhouse, Capt. Rt. Hon. C.


Smiles, Lt.-Col. Sir Walter
Teeling, W.
Watkinson, H.


Smithers, Peter (Winchester)
Teevan, T. L.
Webbe, Sir H. (London &amp; Westminster)


Smyth, Brig. J. G. (Norwood)
Thomas, J. P. L. (Hereford)
Wheatley, Maj. M. J. (Poole)


Snadden, W. McN.
Thompson, Kenneth Pugh (Walton)
White, Baker (Canterbury)


Soames, Capt. C.
Thompson, Lt.-Cmdr. R. (Croydon, W.)
Williams, Charles (Torquay)


Spearman, A. C. M.
Thorneycroft, Peter (Monmouth)
Williams, Gerald (Tonbridge)


Spence, H. R. (Aberdeenshire, W.)
Thornton-Kemsley, Col. C. N.
Williams, Sir Herbert (Croydon, E.)


Spens, Sir Patrick (Kensington, S.)
Thorp, Brig. R. A. F.
Wills, G.


Stanley, Capt. Hon. Richard (N. Fylde)
Tilney, John
Wilson, Geoffrey (Truro)


Stevens, G. P.
Turner, H. F. L.
Winterton, Rt. Hon. Earl


Steward, W. A. (Woolwich, W.)
Turton, R. H.
Wood, Hon. R.


Stewart, Henderson (Fife, E.)
Tweedsmuir, Lady
York, C.


Stoddart-Scott, Col. M.
Vane, W. M. F.



Storey, S.
Vaughan-Morgan, J. K.
TELLERS FOR THE NOES:


Strauss, Henry (Norwich, S.)
Vosper, D. F.
Major Conant and Mr. Digby.


Stuart, Rt. Hon. James (Moray)
Wakefield, Edward (Derbyshire, W.)

Clauses 34 to 38 ordered to stand part of the Bill.

To report Progress; and ask leave to sit again.—[Mr. Ede.]

Committee report Progress; to sit again Tomorrow.

FACTORY INSPECTORS (RECRUITMENT)

Motion made, and Question proposed. "That this House do now adjourn."—[Mr. Delargy.]

11.33 p.m.

Dr. Hill: I desire to raise the not unimportant question of the factory inspectorate in this country, that body which is concerned in working establishments other than this with the welfare, health and safety of those working therein. I will not weary the House with a description of the work of the inspectorate, because on this aspect there are few hon. Members who would not join me in saying what an important part they play in the industry of this country. I want, in the first place, to make the point that this inspectorate is seriously understaffed. At the end of 1949 the inspectorate was 50 short of its establishment of 379 in all groups. At the beginning of May it was 57 under establishment. I believe that there has recently been some recruitment and that the position at present is that the deficit has fallen to or is likely to fall to 42. That means a deficit of about 40 on a normal establishment of 379.
I believe that the remuneration is a not unimportant factor in the position. About six of the most senior officers of the inspectorate are covered by the Chorley Award to senior civil servants,

but the remainder are not. On 10th April I put a Question to the then Minister of Labour about the position and was told that the remuneration for the most senior level was £1,250 a year rising by increments of £50 yearly to £1,450, and the remuneration for the most junior level—in the question of attracting recruits to the service it is the remuneration at the level of the scales of entry that plays the more important part—was £350 a year at the age of 21 rising by annual increments of £25 to £475 a year at the age of 26 and thereafter by the same increments to £600 a year.
Those are the scales in London. Those for the provinces are about £80 less for the most senior grade and about £30 less for the most junior grade. I would remind the House that 75 per cent. of the inspectorate are employed outside London. The position at the beginning of April—I base this upon the reply given to my Question—was that the remuneration for the more senior officers was between 28 and 32 per cent. above the pre-war level and for the junior level 25 to 28 per cent. above the 1939 remuneration, but that was the remuneration calculated upon the maximum of the scale.

Mr. A. Edward Davies: How many fall within the senior and the so-called junior categories?

Dr. Hill: There are about 12 in the senior category and in the region of 100 in the junior category. The majority of the inspectorate are in the intermediate grades. I stress the point that even if we take the maximum of the scale the remuneration was between 24 and 32 per cent. above the pre-war levels, which is in itself an indication of inadequacy, although the maximum of the scales rather conceals the position. I have here


a letter in which a non-medical factory inspector in the middle grades refers to his own position. It says:
My own case is a typical example of the position of the middle group of inspectors. Had there been no war or rise in the cost of living, I should now be earning £650 a year by the 1938 scale. Actually, including all cost of living consolidations, I get £770, 18 per cent. over the pre-war remuneration.
I am not going to weary the House by explaining how this comes about. The Treasury is expert at applying a new scale to existing officers so as to achieve the least possible increase of expenditure.

Mr. Douglas Houghton: It has been doing that for a number of years.

Dr. Hill: Comparison of pre-war and post-war scales is misleading, for it gives too generous an impression of its application to the new personnel, and, after all, that is what really matters. I gave the remuneration as on 10th April, because in the last few weeks there has been a new offer. I understand that this offer is to men only. At any rate, the women factory inspectors have heard nothing of an offer to them. I have no doubt that the offer embodies the principle of unequal pay for equal work. But that is another subject which perhaps will be dealt with more fully by other hon. Members.
I have worked out the new offer in relation to the maximum to the middle of the scale. I find that it means for the superintendent inspector, the senior grade, a 9.2 increase over 1946; for the intermediate grades, an increase of 5 per cent. and 6 per cent., respectively; and for the junior grade, nothing, for they got something through an arbitration award last year, that "something" being embodied in the scale which I have already mentioned for the junior grade.

Mr. Houghton: Women and children last.

Dr. Hill: One may ask why the senior grades got most. Well, the breezes of Chorley blew warm over the senior grades, but they blew more Arctic over the middle and junior grades. The factory inspectorate is getting 20 per cent. to 25 per cent. more than before the war. This is not a party matter, and I think that every hon. Member will agree that this is not only a poor recognition of an important body of men, but that it is beggarly in its practical application.

Mr. Houghton: That is common to the whole of the Civil Service.

Dr. Hill: The hon. Member for Sowerby must rejoice over this opportunity to turn the attention of the House to a portion of the Civil Service.

Mr. Houghton: I am rejoicing. I say that the grievance of the factory inspectorate is the grievance of the whole of the Civil Service.

Dr. Hill: Time is short. In the circumstances, let me stick to this case. In these circumstances, it is not surprising that there is a deficit in the personnel of the factory inspectorate, and it is not surprising that increasing difficulty is being experienced over getting men and women of the right experience—not only academic and technical experience, but practical experience of industry. I say no more about equality, because I know that my hon. Friend in a professional sense at any rate, the Member for Stoke-on-Trent, Central (Dr. Stross) hopes that he may catch your eye, Mr. Deputy-Speaker, for a brief word on the importance of the work.
Only 57 per cent. of the visits needed annually were paid to the factories of this country last year because of the shortage of medical inspectors. The number of factories which it falls to them to inspect has risen from 173,000 before the war to 208,000, and yet only 57 per cent. of that large total is being covered. I ask the Parliamentary Secretary—and I know that he recognises the great importance of this work—whether he thinks that this latest offer can, by any stretch of the imagination, be regarded as fair or reasonable, or likely to attract recruits to the service.
I would put to the Parliamentary Secretary another reason for this shortage of personnel. There is not sufficient recognition of the professional status of the medical inspectors of factories, and if I may say so, I think that the evidence which the Department gave to the Civil Service Arbitration Tribunal was a remarkable example of the official mind. It was that, although these men—and women—were required, so far as possible, to have all the qualifications, once they were in and doing the work, the Department argues that as they are not engaged in the day to day specialist work, but in day to day executive work, then they should be regarded


as within the executive class. That, I would remind the House, is recruited at the age of 18.
I ask the Parliamentary Secretary to agree that when recruitment is made from people of a very specialised experience they should be paid in the light of that experience which they are called upon to have, and that we should hear less of the argument that, not being executive, they should be regarded as part of the executive class. I hope that the Parliamentary Secretary will not answer just in general terms and speak of alterations which may be made in the distant future; because there is a shortage of men for work which is underpaid and insufficiently recognised; and at this time, of all others, we should recognise the part which they play not only in getting satisfaction of the minimum standards, but in educational and advisory work. The factory inspector has acquired a very high place in industry on all sides, and it would be a very grave thing for this generation beginning to develop if the present fine record was made to suffer for the reasons I have given. We need men, and action, soon.

11.49 p.m.

Dr. Barnett Stross: There are many people who cannot understand why this branch of the service connected with the prevention of accidents and industrial disease should be looked upon as the Cinderella of the service. I am not speaking of individual salaries paid to members of individual staffs, but I want to consider the wider aspect. A total of 379 devoted men and women having to look after 208,000 odd establishments at a total expenditure of £453,000 means that the care of the average worker costs us 25s. a year, on average. That is not good enough and, put in that way, we must see that these people do not receive the attention which they merit at our hands.
I have no words too high in praise for the devoted work which these people do. Living, as some of my hon. Friends have done, in Stoke, we know that the inspector is the very closest friend and ally of the working-class population at its work. They have to do incredible things with their time in view of the paucity of their numbers. Not only have they to look after the 810 factories, but they must investigate, on an average, 10 accidents

each week, investigate new diseases, inspect hours of work, and conduct a tremendous amount of education, particularly to those who come from abroad and who, strangely enough, admire the quality of our work, for I am compelled to feel, in view of the way we treat our inspectorate, conditions abroad are bad indeed.
Improvement is steadily occurring, and I not only have to give a mead of praise, but every possible praise to the inspectors. The liaison, as has been said by the hon. Member for Luton (Dr. Hill), between the inspectorate and the employers and the workers is better than ever before. There is co-operation such as we have never known in the past, but there are still bad employers who must be helped, there are still bad establishments, and there are still many accidents which should never occur. For example, there are some 30,000 accidents a year associated with machinery which is moved by power. In every case it is probably a breach of the regulations that accidents occur for the code is very strict. This code is a criminal code and any infringement of it is a breach of the law.
The inspectorate do their best, but they are not in enough numbers to work properly. Anything we can do to assist them by asking the Minister and the Government to double and treble their numbers in the next few years would be doing something essentially good for all our people throughout the country. I said at the beginning that we think this is treated as the Cinderella of the service, and I shall finish by asking the Minister to recognise—I think he will agree—that we want it to be turned now into the fairy princess.

11.52 p.m.

Mr. Malcolm MacPherson: I am glad to have the opportunity of adding my voice for just one minute to the debate. We are all concerned about the importance of the work the inspectorate is doing, and we are all a bit worried at the fact they are short-staffed and over-worked. It is essential we should try to bring them up to strength. I suggest it is not wise to concentrate simply on salary. After all, these people are in the main drawn from a total class—university graduates generally—which as a total class is in short supply, and if we try to bring in more of


these same people we shall be filling up the factory inspectorate by leaving gaps elsewhere.
I suggest to my hon. Friend that he should consider widening the range of people who come in. In particular, I would suggest that the standard top age of entry which, I understand, is still advertised as 30 years, could very well be considerably raised and I would suggest—I will not develop this now because of time—that he might try to extend the range and type of persons he recruits.

11.54 p.m.

The Parliamentary Secretary to the Ministry of Labour (Mr. Frederick Lee): I am obliged to the hon Member for Luton (Dr. Hill) for giving me some indication of the type of matter he wished to discuss. Let me say at once that I agree with him as to the fine quality of the work which this inspectorate are performing and at the splendid way in which they have adapted themselves to the new conditions which we now have for industry. I think it was not very long ago they used to be looked upon as interfering bureaucrats, whereas these days they have acquired a good bed-side manner which, I think, the hon. Member will agree is worthy of the very highest praise.
Turning to the particular points raised. I agree at once that the recruitment to the inspectorate since the war has not as yet filled the large number of vacancies which has accumulated from 1939–1945 during which time recruitment was suspended. I agree with my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross) that it was not a question merely of remuneration that has kept the inspectorate below strength. There is the fact that for the period of the war recruitment was suspended, and it has taken quite a long time to build up the position where, as now, we are 40 below establishment. In 1947, for instance, there were 90 vacancies, and this number has been gradually reduced to 40. In addition, a further six people have already been offered work, and I take it therefore that in the very near future we will be reduced to a deficiency of 34.
We have this year two open competitions, one of which is at present in progress. One hundred and nineteen candidates will be summoned for interview this month, and it is hoped that

the outstanding vacancies will be substantially reduced during 1951. From the figure I have given of 119 candidates who aspire to this very important work, the hon. Member for Luton will know that there is no shortage of applications for these vacancies, but he would agree with me that it is important that we should maintain the high standard of efficiency for which the service is rightly admired. We believe that at the pace at which we have been lessening the gap in our shortage, before very long we will, so far as intake is concerned, reach the numbers required.

Dr. Hill: I believe that in the old days the average age was about 28, most of the graduates having got actual experience in the works. Is it not true that now the average age of applicants and appointed persons is much lower?

Mr. Lee: I could not answer without notice. I will write to the hon. Member on that point.
Normal requirements are between 15 and 20 annually, and I believe that once the backlog is cleared we should not have a lot of difficulty in obtaining that number. The hon. Member endeavoured to relate the recruitment difficulties to inadequate salaries, and I should like to say a few words on this aspect.

Mr. Harmar Nicholls: The Parliamentary Secretary said that the efforts to bring the inspectorate up to establishment may soon be successful, but does he take into account that the number of factories is increasing and that for this reason the strength of the establishment ought to be reconsidered?

Mr. Lee: I am speaking of the present maximum of the establishment. The point which the hon. Member raises is a quite different issue.
The structure and salary scales of the inspectorate were reviewed in 1946 with the object of providing conditions and salaries appropriate to the changed post-war circumstances. This review was designed to provide an attractive career structure related to the long-term recruitment needs of the Inspectorate. Improved salary scales following this review were announced in 1947 and were back-dated to 1st January, 1946. The increases on the pre-war scales ranged from 28 to 32 per cent. in the London area.
I will quote an example taken at random. A male Inspector in Class 1A who in 1938 received a starting salary of £545 per annum, rising to £980 per annum, would as a result of the 1946 revision receive a starting salary of £800, rising to £1,160. In 1949, the appropriate staff association claimed further salary increases and the matter was referred to the Civil Service Arbitration Tribunal in 1950. The Tribunal found that the claim had not been established, but awarded improved starting rates for new entrants. A young man of 25 entering the Inspectorate would now start on a salary of £450, as against £385 prior to the 1950 award. In February of this year, the staff association tabled a further claim for increases, and, as the hon. Member for Luton knows, discussions on their proposals are about to take place.
The final point made by the hon. Member was whether too great a burden of work was placed on too few inspectors. It is, of course, inevitable that with 40 vacancies out of a comparatively small number of inspectors, the full normal inspection programme of the Department cannot be carried out.
I agree that the inspectors must therefore assign priorities for their work so as to devote as much attention as possible to those factories and other premises subject to the Acts, which are in special need of observation and help because of the nature of the processes carried on. I am not able, speaking in this House, to question the merits of the services which have been given by arbitrators or the ability of the negotiation on both sides. I agree that in these days the particular type of people of whom we stand in need in the Inspectorate are also in great demand in industry for other very important work, and that this is bound to have its effect.
I agree that if we compare the increasing wage rates and salaries in very many industries with the increases for the factory inspectors it does not look as if they have kept pace with the others. As my hon. Friend said, it is not only the question of factory inspectors. This question is peculiar to the Civil Service, and they have had increases in conjunction

with the people whom my hon. Friend usually represents.
I should like to express pleasure that the House is taking an interest in this very important type of work. Generally speaking, inside or outside the House I am all for better wages and conditions of employment of all types, but I cannot go too far in that direction now or I should find myself in all sorts of difficulties.
I yield second place to no one in my admiration for the work of factory inspectors. I hope we can continue to keep the high quality of the service. For that reason, I hope we are not to be driven into accepting any lower standards in the effort to get a larger number of people within the inspectorate itself.
In conclusion, I thank the hon. Member for Luton for raising this important matter and for the manner in which he has raised it. I hope that in a short time now we shall be able to get the maximum number of people into this service. I am sure that far from there being any question of the Ministry not looking upon this as an important matter we recognise very fully the very important part they are playing in helping to extend the safeguards of industry and improve its efficiency as a whole.

12.2 a.m.

Mr. H. Nicholls: In view of the fact that the number of vacancies now stands at 40—taking the present establishment—I think that we should face up to the fact that the present establishment is clearly out of date. My hon. Friend suggested that the number of factories had increased from 173,000 to 208,000. It is only right, therefore, that there should be a proportionate increase in the number of inspectors. We want, as the hon. Member for Stoke-on-Trent, Central (Mr. Stross) very enthusiastically said, the number to increase to two or three times as many.

The Question having been proposed after Ten o'Clock on Wednesday evening, and the Debate having continued for half an hour, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Three Minutes past Twelve o'Clock a.m.